8286 Federal Register / Vol. 62, No. 36 / Monday, February 24, 1997 / Notices

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

2Letter from Michael D. Pierson, Senior Attorney,

Regulatory Policy, PSE, to Ivette Lo ́pez, Assistant

Director, Division of Market Regulation, SEC

(‘‘Amendment No. 1’’).

3PSE Rule 10.11, entitled ‘‘Appeal of Floor

Citations and Minor Rule Plan Sanctions,’’ sets

forth the procedures that apply when a member or

member organization appeals a sanction imposed in

connection with a floor citation or the MRP. See

PSE Rules 10.11 and 10.13.

4The provisions of proposed Rule 10.11(d) (5) are

essentially the same as Rule 17.50(d) (2) of the

Chicago Board Options Exchange (‘‘CBOE’’), except

that the proposed PSE forum fees are higher than

those of the CBOE.

5Rule 19d–1(c) (2) under the Act authorizes

national securities exchanges to adopt minor rule

violation plans for the summary discipline and

abbreviated reporting of minor rule violations by

exchange members and member organizations. See

Securities Exchange Act Release No. 21013 (June 1,

1984), 49 FR 23828 (approving amendments to

paragraph (c) (2) of Rule 19d–1 under the Act). The

PSE’s MRP was approved by the Commission in

1985. See Securities Exchange Act Release No.

22654 (Nov. 21, 1985), 50 FR 48853 (approving File

No. SR–PSE–85–24). In 1993, the Exchange

amended its MRP and adopted detailed procedures

relating to the adjudication of minor rule violations.

See Securities Exchange Act Release No. 32510

(June 24, 1993), 58 FR 35491. Thereafter, the

Exchange has modified its MRP several times. See

Securities Exchange Act Release Nos. 34322 (July 6,

1994), 59 FR 35958; 35144 (Dec. 23, 1994), 59 FR

67743 (Dec. 30, 1994); 36622 (Dec. 21, 1995), 60 FR

67384 (Dec. 29, 1995); 37886 (Oct. 29, 1996), 61 FR

37886 (approving File No. SR–PSE–96–26). See also

Securities Exchange Act Release No. 37799 (Oct. 9,

1996), 61 FR 54479 (publishing File No. SR–PSE–

96–30, proposed additions to the MRP, for

comment).

6For example, an investigation will reveal that a

customer’s original order, as represented on an

‘‘upstairs’’ trading ticket, was for a number of

option contracts that was greater than ten, but

would assist an investor in deciding whether

to invest in that fund; (ii) rule 498 under the

Securities Act and the Investment Company

Act, which would permit investors to buy

mutual fund shares based on a summary

document, or profile, that would provide key

information about a mutual fund; and (iii)

rule 35d–1 under the Investment Company

Act, which would require mutual funds and

other registered investment companies with

names suggesting that the company focuses

on a particular type of investment (e.g., a

fund that calls itself the ABC Stock Fund, the

XYZ Bond Fund, or the 123 Government

Fund) to invest at least 80% of its assets in

the type of investment suggested by its name.

For further information please contact:

Elizabeth R. Krentzman or Kathleen K.

Clarke, (202) 942–0721.

At times, changes in Commission

priorities require alterations in the

scheduling of meeting items. For further

information and to ascertain what, if

any, matters have been added, deleted

or postponed, please contact:

The Office of the Secretary at (202)

942–7070.

Dated: February 20, 1997.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–4666 Filed 2–20–97; 3:45 pm]

BILLING CODE 8010–01–M

[Release No. 34–38293; File No. SR–PSE–

96–42]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange

Incorporated Relating to an

Amendment to the Minor Rule Plan and

the Adoption of a Forum Fee for Minor

Rule Plan Appeals

February 14, 1997.

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

Securities Exchange Act of 1934

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

October 25, 1996, the Pacific Stock

Exchange Incorporated (‘‘PSE’’ or

‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by the self-regulatory

organization. On October 26, 1996, PSE

submitted an amendment that clarifies

certain aspects of the proposed rule

change.2 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 Exchange is proposing to amend

its rules to adopt a forum fee that may

be imposed when a Member or Member

Organization appeals a finding of a

Minor Rule Plan (‘‘MRP’’) violation, and

the review panel affirms the initial

finding of a violation. The Exchange

also is proposing to amend its MRP to

include PSE Rule 6.87(c), which

prohibits the dividing up of an option

order to make its parts eligible for entry

into Auto-Ex. The text of the proposed

rule change is available at the Exchange

and 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

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

The Exchange is proposing to adopt a

new subsection (5) to PSE Rule 10.11(d)

to provide as follows: If, after a hearing

or review on the papers pursuant to

subsection (d) of PSE Rule 10.11,3 a

panel appointed by the pertinent

committee determines that a Member or

Member Organization has violated one

or more Exchange rules, as alleged, that

panel: (i) May impose any one or more

of the disciplinary sanctions authorized

by the Exchange’s Constitution and

Rules and (ii) shall impose a forum fee

against the person charged in the

amount of two hundred fifty dollars

($250) if the determination was reached

based on a review of the papers, or in

the amount of five hundred dollars

($500) if a hearing was conducted. In

the event that the Panel determines that

a Member or Member Organization has

violated one or more Exchange rules, as

alleged, and the sole disciplinary

sanction imposed by the pertinent

committee for such rule violation(s) is a

fine that is less than the total fine

initially imposed by the Exchange for

the subject violation(s), the Committee

has the discretion to waive the

imposition of a forum fee.4 The

Exchange believes this fee is necessary

to, among other things, help offset the

costs associated with certain appeals

involving MRP violations.

The Exchange also is proposing to

amend its MRP,5 which provides that

the Exchange may impose a fine not to

exceed $5,000 on any member, member

organization, or person associated with

a member organization for any violation

of an Exchange rule that has been

deemed to be minor in nature and

approved by the Commission for

inclusion in the MRP. PSE Rule 10.13,

subsection (h)–(j), sets forth the specific

Exchange rules deemed to be minor in

nature.

Specifically, the Exchange is

proposing to add the following violation

to the section of the MRP relating to

Options Floor Decorum and Minor

Trading Rule Violations: ‘‘Dividing up

an order to make its parts eligible for

entry into Auto-Ex (Rule 6.87(c))’’ (with

recommended fines of $2,500, $3,750

and $5,000 for first, second, and third

violations). The Exchange believes that

violations of Rule 6.87(c) are objective

in nature and easily verifiable and,

therefore, appropriate to include this

rule in the MRP.6 The Exchange also
Federal Register / Vol. 62, No. 36 / Monday, February 24, 1997 / Notices 8287

handwritten notes will indicate that the original

order has been divided up. In addition, the

Exchange’s time and sales report will establish that

a number of sub-orders occurred sequentially on the

Auto-Ex system during a relatively short period of

time.

7 15 U.S.C. 78f(b).

8 15 U.S.C. 78f(b)(5).

9 15 U.S.C. 78f(b)(7).

17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.18b-4.

notes that the recommended fine levels

being proposed are comparable to the

fines that the Exchange has imposed

previously for violations of Rule 6.87(c).

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b) 7 of the Act in general and furthers

the objectives of Section 6(b)(5) 8 and

Section 6(b)(7) 9 in particular in that it

is designed to promote just and

equitable principles of trade, to assure

that members, member organizations,

and persons associated with members

and member organizations are

appropriately disciplined for violations

of Exchange rules and, in general, to

protect investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes the proposed

rule change will impose no 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.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the 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 the 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, 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. Also, copies of

such filing will be available for

inspection and copying at the principal

office of the PSE. All submissions

should refer to File No. SR–PSE–96–42

and should be submitted by March 17,

1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–4446 Filed 2–21–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38286; File No. SR–CBOE–

96–70]

Self-Regulatory Organizations;

Chicago Board Options Exchange,

Inc., Order Approving Proposed Rule

Change Relating to the Reporting

Requirements for Securities Accounts

and Orders of Market-Makers and Joint

Account Provisions

February 13, 1997.

I. Introduction

On November 20, 1996, the Chicago

Board Options Exchange, Inc., (‘‘CBOE’’

or ‘‘Exchange’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) 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 relating to the reporting

requirements for securities accounts and

orders of market-makers and joint

account provisions. The proposed rule

change was published for comment in

Securities Exchange Act Release No.

38085 (December 24, 1996), 62 FR 434

(January 3, 1997). The Commission

received no comments on the proposal.

II. Description of the Proposal

CBOE proposes amending Rule 8.9,

regarding Securities Accounts and

Orders of Market-Makers. Specifically,

CBOE is amending Rule 8.9(a),

regarding the identification of accounts,

to eliminate the routine submission of

information by market-makers

respecting non-market-maker trading

accounts, or ‘‘outside accounts.’’

Currently, Exchange market-makers are

required to identify and report to the

Exchange all accounts in which the

market-maker may engage in stock,

option and securities trading, directly or

indirectly, or over which it has

investment discretion. The rule in its

current form is broad enough to require

market-makers to report professional

trading accounts held at clearing firms,

as well as outside personal accounts

such as brokerage accounts. The

Exchange is amending the reporting

requirements of Rule 8.9(a) to eliminate

the routine submission of information

respecting non-market-maker trading

accounts, or ‘‘outside accounts.’’ The

rule change will require market-makers

to report outside account information

only when requested by the Exchange.

CBOE also proposes amending Rule

8.9(b), regarding the reporting of marketmaker orders. Currently, each marketmaker is required to report to the

Exchange every order entered into by

that market-maker within the

specifications of the Rule. CBOE

proposes amending Rule 8.9(b) to

require the clearing firm that maintains

the market-maker’s trading account,

rather than the market-maker

personally, to report executed order

information to the Exchange. The

Exchange believes it is appropriate to

limit the required order information to

‘‘executed’’ orders only, based upon its

position that only marginal surveillance

benefits are derived from gathering

unexecuted order information on a

routine basis.

Under the proposal, the market-maker

will be held responsible for the

reporting requirements only if the

clearing firm is not reporting executed

order information to the Exchange and/

or if the Exchange has requested that the

market-maker provide the information.

Furthermore, the proposed rule change

will clarify that this reporting

requirement applies to ‘‘professional

trading accounts’’ (i.e., transactions

cleared into all accounts carried for

market-makers who are the subject of a

clearing firm letter of guarantee issued

to the Exchange pursuant to CBOE Rule

8.5).

The clearing firm thus will be the

primary source for the reporting of

market-maker executed order

information to the Exchange. However,

all firms which represent and execute

market-maker orders, including order

services firms as defined in Exchange

Rule 6.77, will continue to be