16886 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 38273

(February 12, 1997), 62 FR 7489.

4See Securities Exchange Act Release No. 37810

(October 11, 1996), 61 FR 54481 (‘‘Pilot Approval

Order’’).

5More specifically, under the rule changes

approved by the Commission, LMMs may perform

all functions of the Order Book Official (‘‘OBO’’) in

designated issues pursuant to Rules 6.51 through

6.59. In that regard, the Exchange will allow the

LMM to utilize Exchange personnel to assist the

LMM in performing the OBO function, and the

Exchange will charge the LMM a reasonable fee for

such use of Exchange personnel. If the program is

made permanent, LMMs would be responsible for

hiring and maintaining their own employees, but

the Exchange would provide employees to assist

LMMs when necessary due to market conditions. In

all cases, however, employees working in the Book

operation will be subject to all rules, policies, and

procedures established by the Exchange. With

regard to their duties as market makers, LMMs

would be required to perform all obligations

provided in Rules 6.35 through 6.40 and 6.82.

6Each option issue typically has only one symbol

associated with it, unless LEAPs are traded on that

issue, in which case there usually would be two

additional symbols related to the issue, or unless a

contract adjustment is necessary due, for example,

to a merger or stock split, in which case one

additional symbol usually would be added.

7See Pilot Approval Order, supra note 4.

8 17 CFR 240.15c3–1.

9 15 U.S.C. § 78f(b).

10 15 U.S.C. § 78f(b)(5).

fraudulent and manipulative acts and

practices, in promoting just and

equitable principles of trade, in

protecting investors and the public

interest, and in appropriately

disciplining members for violations of

its rules, the rules and regulations of the

Commission, and the rules of the MSRB.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD does not believe that 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, 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 in

the Commission’s Public Reference

Room. Copies of such filing will also 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 April 29, 1997.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8929 Filed 4–7–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–38462; File No. SR–PSE–

96–45]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change by

the Pacific Stock Exchange

Incorporated Relating to the

Exchange’s Lead Market Maker

Options Book Pilot Program

April 1, 1997.

I. Introduction

On December 10, 1996, the Pacific

Stock Exchange Incorporated (‘‘PSE’’ or

‘‘Exchange’’) filed with 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 proposal to expand the

scope of its Lead Market Maker

(‘‘LMM’’) Book Pilot Program to allow

additional LMMs to participate and to

allow a greater number of option issues

to be eligible under the program. The

proposal was published for comment in

the Federal Register on February 19,

1997.3 No comments were received on

the proposal. This order approves the

Exchange’s proposal.

II. Description of the Proposal

On October 11, 1996, the Commission

approved an Exchange proposal to

adopt a one-year pilot program under

which some LMMs are permitted to

manage the options public limit order

book (‘‘Book’’) in certain designated

issues.4 Under the pilot, the approved

LMMs manage the Book function, take

responsibility for trading disputes and

errors, set rates for Book execution, and

pay the Exchange a fee for systems and

services.5 The program allows LMMs to

have greater control over their

operations on the Exchange floor by

allowing them, among other things, to

set their own rates for execution

services provided to customers.

Under the pilot as approved by the

Commission, the program is limited to

no more than three LMMs and no more

than forty option symbols in total,6

during a one-year pilot phase. The PSE

is proposing to expand the scope of the

program to allow additional LMMs to

participate, and to allow a greater

number of option issues to be eligible

under the Program. Specifically, the

Exchange proposed an expansion of the

Book Pilot Program to allow for up to

nine LMMs and up to 150 options

symbols.

The LMMs who participate during the

pilot phase are selected by the Options

Floor Trading Committee based on

certain designated factors.7 Approved

LMMs must maintain ‘‘minimum net

capital,’’ as provided in Rule 15c3–1

under the Act,8 and also must maintain

a cash or liquid asset position of at least

$500,000, plus $25,000 for each issue

over five issues for which they perform

the function of an OBO. Only multiplytraded option issues are eligible during

the pilot phase.

III. Discussion

After careful consideration, the

Commission finds that the Exchange’s

proposal to expand the Book Pilot

Program is consistent with the

requirements of the Act and the rules

and regulations thereunder applicable to

a national securities exchange in that

the proposal is consistent with Section

6(b) of the Act,9 in general, and Section

6(b)(5),10 in particular, in that it is

designed to facilitate transactions in

securities, to promote just and equitable
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Notices 16887

11 In approving the rule change, the Commission

has considered the proposed rule changes’ impact

on efficiency, competition, and capital formation.

15 U.S.C. § 78c(f).

12The PSE has represented that it has

experienced no operational problems and received

no complaints regarding the operation of the Book

Pilot Program. Telephone conversation between

Janet W. Russell-Hunter, Special Counsel, Office of

Market Supervision, Division of Market Regulation,

SEC, and Michael D. Pierson, Senior Attorney,

Regulatory Policy, PSE, April 1, 1997.

13 15 U.S.C. 78s(b)(2) (1988).

14 17 CFR 200.30–3(a)(12).

principles of trade, and to protect

investors and the public interest.11

Allowing the PSE to appoint up to six

additional LMMs to the Book Pilot

Program and increasing the number of

options symbols available to the

program by 110 constitutes a reasonable

and limited expansion of the Book Pilot

Program. The expansion should provide

the Exchange with sufficient experience

administering the pilot in order to better

determine whether the Book Pilot

Program should be made permanent

upon its scheduled expiration on

October 31, 1997.12

As noted in the Pilot Approval Order,

before the Book Pilot Program can be

approved on a permanent basis, or

further extended, the Exchange must

provide the Commission, within 6

months prior to its expiration, with a

report on the operation of the Book Pilot

Program. Specifically, the PSE must

submit an updated pilot program report

by April 1997 that addresses: (1)

Whether there have been any

complaints regarding the operation of

the pilot; (2) whether the PSE has taken

any disciplinary or performance action

against any member due to the

operation of the pilot; (3) whether the

PSE has reassigned any options issues

traded pursuant to the pilot; and (4) the

impact of the pilot on the bid/ask

spreads, depth and continuity in PSE

options markets.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,13 that the

proposed rule change (File No. SR–PSE–

96–45), is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.14

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–8877 Filed 4–7–97; 8:45 am]

BILLING CODE 8010–01–M

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

Environmental Impact Statement: San

Mateo County, California

AGENCY: Federal Highway

Administration (FHWA), DOT.

ACTION: Notice of Intent to supplement

a final environmental impact statement.

SUMMARY: The FHWA is issuing this

notice to advise the public that a

supplement to a final environmental

impact statement will be prepared for a

proposed highway project in San Mateo

County, California.

FOR FURTHER INFORMATION CONTACT: John

R. Schultz, Chief, District OperationsNorth, Federal Highway Administration,

980 Ninth Street, Suite 400, Sacramento,

California 95814–2724; Telephone:

(916) 498–5041.

SUPPLEMENTARY INFORMATION: The

FHWA, in cooperation with the

California Department of Transportation

(Caltrans), will prepare a supplement to

the final environmental impact

statement (EIS) on a proposal to

improve State Route (SR) 1 in San

Mateo County, California. The original

final EIS for the improvements (FHWA–

CA–EIS–83–14–F) was approved on

April 16, 1986. The project study limits

of alternatives considered in the final

EIS extended from Half Moon Bay

Airport, between Moss Beach and El

Granada, on the south to Linda Mar

Boulevard in Pacifica on the north, a

distance of approximately 11.3 km (7

miles).

The preferred alternative, identified

in the final EIS and selected in the

Record of Decision signed on May 30,

1986, is known as the Martini Creek

alignment alternative. From the

southern end, this alternative begins

north of the southern project study limit

on SR 1, 0.2 km (0.1 mile) north of

Montara near the Chart House

Restaurant. From there it swings inland,

crosses Martini Creek, curves seaward

(west) and then northeasterly, proceeds

over the San Pedro Mountain saddle

and down into the City of Pacifica

where it rejoins SR 1 at Linda Mar

Boulevard. The proposed project is a

two-land, controlled access facility;

however, since the entire project on

both sides of the summit exceeds six

percent, the project design includes an

uphill slow vehicle lane in each

direction. The proposed project is

approximately 7.2 km (4.5 miles) in

length.

Litigation regarding the project was

commenced in U.S. District Court in the

Northern District of California in June

1986 (Sierra Club, et al. v. United States

Department of Transportation, et al.,

Civ. No. 86–3384 DLJ). The project has

been enjoined since September 1986,

prior to the commencement of any

construction. Ultimately, the District

Court found that the final EIS was

inadequate only in its discussion and

analysis of noise impacts and required

a re-analysis of those impacts, as set

forth in the Court’s Orders of April 3,

1989, and April 2, 1990. Thereafter, in

1995, FHWA and Caltrans prepared a

limited supplemental EIS for the

purpose of addressing the noise impact

analysis deficiencies in the final EIS, as

determined in the litigation.

Based on public comments received,

the August 10, 1995 Record of Decision

regarding the supplemental EIS

included a commitment by the FHWA

to address the issue of a tunnel

alternative in the reevaluation of the

1986 final EIS. A tunnel alternative was

considered earlier in the project

development process, but has been

withdrawn from active consideration

prior to the issuance of the draft EIS that

was the basis for the 1986 final EIS. The

reevaluation was to be undertaken since

major steps to advance the project had

not occurred within three years after the

approval of the final EIS. 23 CFR

771.129(b). The intent of the

reevaluation of the final EIS was to

determine whether or not new

information or circumstances relevant to

environmental concerns and bearing on

the proposed project or its impacts

would result in significant

environmental impacts not evaluated in

the final EIS. 23 CFR 771.130(a)(2).

In response to requests from local

agencies and the public, Caltrans hired

an independent consulting firm to

conduct a tunnel feasibility study.

Based upon the results of the tunnel

feasibility report issued in October

1996, and the updated cost estimates for

the revised highway bypass alternative

(now $117 million), FHWA and Caltrans

have determined that a tunnel

alternative is a reasonable alternative for

the proposed project that should be

fully evaluated in the environmental

process. Therefore, a second

supplement to the 1986 final EIS will be

prepared and will include an analysis of

both the updated Martini Creek bypass

alternative and a tunnel alternative.

Since the purpose of a reevaluation is to

determine whether or not the original

EIS remains valid, FHWA’s decision to

prepare a full supplemental EIS (as

compared with the 1995 supplemental

EIS which was of limited scope) means

that a reevaluation of the 1986 final EIS

is no longer necessary.