[Federal Register Volume 62, Number 35 (Friday, February 21, 1997)]
[Notices]
[Pages 8071-8072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4233]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38279; File No. SR-PSE-96-48]


Self-Regulatory Organizations; Pacific Stock Exchange, Inc.; 
Order Granting Approval to Proposed Rule Change Relating to A.M.-
Settlement

February 12, 1997.
    On December 18, 1996, the Pacific Stock Exchange, Inc. (``PSE'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``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 codify certain existing procedures relating to 
a.m.-settled index options.
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    \1\ 15 U.S.C. Sec. 78s(b).
    \2\ 17 CFR 240.19b-4.
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    Notice of the proposed rule change was published for comment in the 
Federal Register on January 14, 1997.\3\ No comments were received on 
the proposal. This order approves the proposal.
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    \3\ Securities Exchange Act Release No. 34-38127 (January 14, 
1997).
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I. Description

    The Exchange proposes to adopt new Rule 7.8(e), entitled ``A.M.-
Settled Index Options.'' This rule provides that the last day of 
trading for A.M.-settled index option shall be the business day 
preceding the last day of trading in the underlying securities prior to 
expiration. It states that the current index value at the expiration of 
an A.M.-settled option shall be determined on the last day of trading 
in the underlying securities prior to expiration. It further provides 
that the current index value shall be determined by reference to the 
reported level of such index is derived from first reported sale 
(opening) prices of the underlying securities on such day. In addition, 
in any case where the security does not open for trading on that day, 
the last reported sale price of such security shall be used unless the 
exercise settlement amount is fixed in accordance with the Rules and 
By-Laws of The Options Clearing Corporation.
    Subsection (1)(B) of the proposed rule further states that in any 
case where an exercise settlement amount is fixed for any series of 
index options pursuant to the Rules and By-Laws of The Options Clearing 
Corporation, the amount so fixed shall be the amount required to be 
paid upon exercise of options of that series notwithstanding any 
difference between the current index value used by The Options Clearing 
Corporation in fixing that amount and the index value determined 
pursuant to Exchange Rules or practices.
    The rule change further states that the following A.M.-settled 
index options are approved for trading on the Exchange: the PSE 
Technology Index; the Wilshire Small Cap Index, and the Dow Jones & Co. 
Taiwan Index.

II. Discussion

    After careful review, 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).\4\ 
Specifically, the proposal clarifies procedures for determining the 
current index value of A.M.-settled index options by conforming PSE's 
rules and practices regarding these products to the current rules and 
practices of The

[[Page 8072]]

Options Clearing Corporation and the other exchanges. Thus, the 
Commission believes that the proposal is consistent with the Section 
6(b)(5) \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, in that it will foster cooperation and coordination with 
persons engaged in regulating, clearing, selling and processing 
information with respect to transactions in securities.\6\
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    \4\ 15 U.S.C. Sec. 78(b).
    \5\ 15 U.S.C. Sec. 78(b)(5).
    \6\ In approving these rules, the Commission has considered the 
proposed rules' impact on efficiency, competition, and capital 
formation. 15 U.S.C. Sec. 78c(f).
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III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-PSE-96-48) be, and hereby is, 
approved.

    \7\ 15 U.S.C. Sec. 78s(b)(2).
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    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. 97-4233 Filed 2-20-97; 8:45 am]
BILLING CODE 8010-01-M