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###### Securities and Exchange Commission

          - [Release No. 34-42660; File No. SR-PCX-00-11]

                    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 March 26, 2000, the Pacific Exchange, Inc. (“PCX” or “Exchange”) 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 Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.                

                    The Exchange's proposed rule change raises issues similar to those raised by the New York Stock Exchange's (“NYSE” proposal to repeal NYSE Rule 390, which rule generally prohibits NYSE members and their affiliates from effecting transactions in certain NYSE-listed securities away from a national securities exchange. The Commission recently issued the notice of filing for the NYSE's proposal (“NYSE Notice”) and solicited comment on a number of important issues that have broad implications for the structure of the U.S. securities markets.[3]                                          Specifically, the Commission requested comment on market fragmentation—the trading of orders in multiple locations without interaction among those orders—and on                           ( print page 21053)                        several options for addressing market fragmentation. To promote a comprehensive discussion of off-board trading restrictions and related market fragmentation issues, the Commission requests that persons interested in the Exchange's proposal refer to the NYSE Notice and submit comments that respond to the questions presented in the NYSE Notice.[4] 

## I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange proposes to eliminate Rules 5.43-5.49 and to modify Rule 5.5(b) which relate to off-board trading restrictions.

## 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 Exchange 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 Exchange 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 eliminate Rules 5.43-5.49 and to modify Rule 5.5(b) which relate to off-board trading restrictions. The Exchange believes that once the Commission approves the NYSE's proposal to rescind its off-board trading restrictions, the Exchange's off-board trading restrictions will no longer be necessary or appropriate.[5] 

#### 2. Statutory Basis

                    The proposed rule changes are consistent with Section 6(b) of the Act [6]                                          in general and furthers the objectives of Section 6(b)(5) [7]                                          in particular in that they are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination between customers, issuers, brokers and dealers.                

### 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 that is not necessary or appropriate in furthermore 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

                    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, including whether the proposed rule change is consistent with the Act. The Commission also invites interested persons to submit written data, views, and arguments on the market fragmentation issues presented in the NYSE Notice.[8]                                          Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 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 for inspection and copying at the principal office of the Exchange. All submissions should refer to File No. SR-PCX-00-11 and should be submitted by May 10, 2000. Comments responding to the Commission's request for comment on market fragmentation issues should refer to File No. SR-NYSE-99-48 and should be submitted by April 28, 2000.                

                        For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[9] 

Jonathan G. Katz,

Secretary.

# Footnotes

1.                             15 U.S.C. &78s(b)(1).                    
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2.                             17 CFR 240.19b-4.                    
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3.                                                     *See*                        Securities Exchange Act Release No. 42450 (Feb. 23, 2000), 65 FR 10577 (Feb. 28, 2000) File No. SR-NYSE-99-48). The Commission notes that similar proposals have been filed by the American Stock Exchange, Securities Exchange Act Release No. 42460 (February 25, 2000), 65 FR 11618 (March 3, 2000) (File No. SR-Amex-00-05); the Chicago Stock Exchange, Securities Exchange Act Release No. 42459 (Feb. 25, 2000), 65 FR 11619 (March 3, 2000) (File No. SR-CHX-99-28); the Philadelphia Stock Exchange, Securities Exchange Act Release No. 42458 (Feb. 25, 2000), 65 FR 11628 (March 3, 2000) (File No. SR-Phlx-00-12); and the Boston Stock Exchange, SR-BSE-00-02.                    
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4.                             The Commission notes that the NYSE Notice is available on the Commission's website at: <http://www.sec.gov/​rules/​sros/​ny9948n.htm.>                    
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5.                             Telephone conversation between Michael D. Pierson, Senior Attorney, Regulatory Policy, Exchange, and Rebekah Liu, Special Counsel, Division of Market Regulation, Commission, dated April 3, 2000.                    
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6.                             15 U.S.C. 78f.                    
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7.                             15 U.S.C. 78f(b)(5).                    
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8.                                                     *See supra*                         notes 3 and 4.                    
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9.                                 17 CFR 200.30-3(a)(12).                        
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[FR Doc. 00-9790 Filed 4-18-00; 8:45 am]

BILLING CODE 8010-01-M