21798 Federal Register / Vol. 66, No. 84 / Tuesday, May 1, 2001 / Notices

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the PCX made certain

technical changes relating to numbering of

proposed rule text. See letter from Cindy L. Sink,

Senior Attorney, Regulatory Policy, PCX, to Andrew

Shipe, Attorney, Division of Market Regulation,

SEC, dated April 16, 2001 (‘‘Amendment No. 1’’).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44182; File No. SR–PCX–

2001–01]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to Trust Issued Receipts

April 16, 2001.

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 January 8,

2001, 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 and

II below, which Items have been

prepared by the Exchange. Amendment

No. 1 to the proposed rule change was

filed on April 18, 2001.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons, and to

grant approval to the proposed rule

change on an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to adopt

generic listing requirements for Trust

Issued Receipts (‘‘TIRs’’) that would

permit its wholly-owned subsidiary

PCX Equities, Inc. (‘‘PCXE’’ or ‘‘the

Corporation’’) to trade, either by listing

or pursuant to unlisted trading

privileges (‘‘UTP’’), specified series of

TIRs pursuant to Rule 19b–4(d) under

the Act. Below is the text of the

proposed rule change. Italics indicate

text to be added.

* * * * *

PCX Equities, Inc. Trust Issued Receipts

Rule 8.200(a). The Corporation will

consider for trading, whether by listing or

pursuant to unlisted trading privileges, Trust

Issued Receipts that meet the criteria of this

Rule.

(b) Definitions. A Trust Issued Receipt is a

security (1) that is issued by a trust (‘‘Trust’’)

which holds specific securities deposited

with the Trust; (2) that, when aggregated in

some specified minimum number, may be

surrendered to the Trust by the beneficial

owner to receive the securities; and (3) that

pay beneficial owners dividends and other

distributions on the deposited securities, if

any are declared and paid to the trustee

(‘‘Trustee’’) by an issuer of the deposited

securities.

(c) Designation. The Corporation may

trade, whether by listing or pursuant to

unlisted trading privileges, Trust Issued

Receipts based on one or more securities. The

Trust Issued Receipts based on particular

securities shall be designated as a separate

series and shall be identified by a unique

symbol. The securities that are included in a

series of Trust Issued Receipts shall be

selected by the Corporation or by such other

person as shall have a proprietary interest in

such Trust Issued Receipts.

(d) Initial and Continued Listing and/or

Trading. Trust Issued Receipts will be traded

on the Corporation subject to application of

the following criteria:

(1) Commencement of Trading—For each

Trust, the Corporation will establish a

minimum number of Trust Issued Receipts

required to be outstanding at the time of

commencement of trading on the

Corporation.

(2) Continued Trading—Following the

initial twelve month period following

formation of a Trust and commencement of

trading on the Corporation, the Corporation

will consider the suspension of trading in or

removal from listing of or termination of

unlisted trading privileges for a Trust upon

which a series of Trust Issued Receipts is

based under any of the following

circumstances:

(A) if the Trust has more than 60 days

remaining until termination and there are

fewer than 50 record and/or beneficial

holders of Trust Issued Receipts for 30 or

more consecutive trading days;

(B) if the Trust has fewer than 50,000

receipts issued and outstanding;

(C) if the market value of all receipts issued

and outstanding is less than 1,000,000; or

(D) if any other event shall occur or

condition exists which, in the opinion of the

Corporation, makes further dealings on the

Corporation inadvisable.

Upon termination of a Trust, the

Corporation requires that Trust Issued

Receipts issued in connection with such trust

be removed from listing or have their

unlisted trading privileges terminated. A

Trust may terminate in accordance with the

provisions of the Trust prospectus, which

may provide for termination if the value of

securities in the Trust falls below a specified

amount.

(3) Term—The stated term of the Trust

shall be as stated in the Trust prospectus;

however, a Trust may be terminated under

such earlier circumstances as may be

specified in the Trust prospectus.

(4) Trustee—The trustee must be a trust

company or banking institution having

substantial capital and surplus and the

experience and facilities for handing

corporate trust business. In cases where, for

any reason, an individual has been

appointed as trustee, as qualified trust

company or banking institution must be

appointed co-trustee.

(5) Voting—Voting rights shall be as set

forth in the Trust prospectus.

(e) ETP Holders and ETP Firms. ETP

Holders and ETP Firms shall provide to all

purchasers of newly issued Trust Issued

Receipts a prospectus for the series of Trust

Issued Receipts.

(f) Applicability. This Rule is applicable

only to Trust Issued Receipts. Except to the

extent inconsistent with this Rule, or unless

the context otherwise requires, the provisions

of the Bylaws and all other rules and

procedures of the Board of Directors shall be

applicable to the trading on the Corporation

of such securities. Trust Issued Receipts are

included within the definition of ‘‘security’’

or ‘‘securities’’ as such terms are used in the

Bylaws and Rules of the Corporation.

Commentary:

.01 The Corporation may approve trust

issued receipts for trading, whether by listing

or pursuant to unlisted trading privileges,

pursuant to Rule 19b–4(e) under the

Securities Exchange Act of 1934, provided

that the following criteria are satisfied:

(a) each security underlying the trust

issued receipt must be registered under

Section 12 of the Exchange Act;

(b) each security underlying the trust

issued receipt must have a minimum public

float of at least $150 million;

(c) each security underlying the trust

issued receipt must be listed on a national

securities exchange or traded through the

facilities of Nasdaq as a reported national

market system security;

(d) each security underlying the trust

issued receipt must have an average daily

trading volume of at least 100,000 shares

during the preceding, sixty-day trading

period;

(e) each security underlying the trust

issued receipt must have an average daily

dollar value of shares traded during the

preceding sixty-day trading period of at least

$1 million; and

(f) the most heavily weighted security in

the trust issued receipt cannot initially

represent more than 20% of the overall value

of the trust issued receipt.

* * * * *

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 III 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 adopt

generic listing requirements to

Federal Register / Vol. 66, No. 84 / Tuesday, May 1, 2001 / Notices 21799

4 17 CFR 240.19b–4(e). 5 17 CFR 240.19b–4(c)(1). 6 15 U.S.C. 78s(b).

7See Securities Exchange Act Release No. 40761

(December 8, 1998), 63 FR 70952 (December 22,

1998). 8 15 U.S.C. 78s(b).

9See Securities Exchange Act Release No. 43496

(September 29, 2000), 65 FR 60230 (October 10,

2000).

10See Securities Exchange Act Release No. 41892

(September 21, 1999), 64 FR 52559 (September 29,

1999).

11 15 U.S.C. 78(1).

12 17 CFR 240.19b–4(e).

13The Exchange anticipates requiring a minimum

of 150,000 outstanding receipts before trading can

commence.

accommodate the trading, whether by

listing or UTP, of TIRs pursuant to Rule

19b–4(e) under the Act.4 Rule 19b–4(e)

provides that the listing and trading of

a new derivative securities product by a

self-regulatory organization (‘‘SRO’’)

will not be deemed a proposed rule

change, pursuant to paragraph (c)(1) of

Rule 19b–4,5 if the Commission has

approved, pursuant to Section 19(b) of

the Act,6 the SRO’s trading rules,

procedures and listing requirements for

the product class that include the new

derivative securities product, and the

SRO has a surveillance program for the

product class.7 The Exchange believes

that the Commission’s approval of the

proposed listing requirements for TIRs

will allow PCXE to begin trading

qualifying products without the need for

notice and comment and Commission

approval under section 19(b) of the

Act.8 The Exchange’s ability to rely on

Rule 19b–4(e) for these products

potentially reduces the time frame for

bringing these securities to the market

and thus enhances investors’

opportunities.

The Commission has previously

approved requests of the American

Stock Exchange (‘‘Amex’’) and the

Chicago Stock Exchange (‘‘CHX’’) to

provide generic standards to list and/or

trade TIRs.9 The Exchange believes that

its proposed listing requirements for TIR

are substantially similar to the listing

requirements at the Amex and CHX. The

information provided below is intended

to provide a description of how TIRs are

created traded and is similar to that

discussed in the original Amex TIRs

Approval Order.10

a. General. TIRs are negotiable

receipts that are issued by a trust in

which securities of issuers are deposited

and held on behalf of the holders of the

TIRs. They are designed to allow

investors to hold interests in a variety of

companies in a particular industry

through a single, exchange-listed and

traded instrument that represents

beneficial ownership in the deposited

securities. Holders may cancel their

TIRs at any time to receive their pro rata

share of the underlying securities.

Beneficial owners of the receipts have

the same rights, privileges, and

obligations as they would if they

beneficially owned the underlying

securities outside the TIRs program.

Holders of the receipts have the right to

instruct the trustee to vote their pro rata

share of the underlying securities

evidenced by the receipts. They will

receive reports, proxy solicitations, and

other information distributed by the

issuers of the deposited securities to

their security holders, and will receive

their pro rata share of the dividends and

other distributions declared and paid by

the issuers to the trustee.

b. Creation of the Trust. TIRs will be

issued by a trust created pursuant to a

depositary trust agreement. After the

initial offering, the trust may issue

additional receipts on a continuous

basis when an investor deposits the

requisite securities in the trust. An

investor will be permitted to withdraw

the underlying securities upon delivery

to the trustee of one or more round lots

of 100 TIRs. Conversely, an investor

may deposit the necessary securities

and receive TIRs in return.

c. The Trust Issued Receipts Portfolio.

The companies represented by

securities in the portfolio underlying the

TIRs must meet the following minimum

criteria: (1) The companies’ common

stock must be registered under section

12 of the Act; 11 (2) the minimum public

float of each company included in the

portfolio must be at least $150 million;

(3) each security must either be listed on

a national securities exchange or traded

through the facilities of Nasdaq as a

reported national market system

security; (4) the average daily trading

volume for each security must be at

least 100,000 shares during the

preceding sixty-day trading period; (5)

the average daily dollar value of the

shares traded during the preceding

sixty-day trading period must be at least

$1 million; and (6) the most heavily

weighted security in the TIR cannot

initially represent more than 20% of the

overall value of the TIR.

d. Criteria for Initial and Continued

Listing. The Exchange intends to list or

trade pursuant to UTP, specified series

of TIRs that currently are listed on other

exchanges and that are developed from

time to time. Under the proposed rules,

the Exchange may list or trade pursuant

to Rule 19b–4(e),12 a series of TIRs that

meet the specified criteria and such

series has the requisite level of TIRs

outstanding at the time of

commencement of trading on the

PCXE.13 The minimum number of

receipts that must be outstanding at

commencement of trading on PCXE will

be included in any required submission

under Rule 19b–4(e).

The Exchange believes that the

proposed initial listing requirements

will ensure that no security underlying

a TIR will be readily susceptible to

manipulation, while permitting

sufficient flexibility in the construction

of various TIRs to meet investors’ needs.

The Exchange also believes that these

criteria will ensure sufficient liquidity

for those investors seeking to purchase

and deposit the underlying securities

with the trustee to create a new TIR.

In connection with continued listing,

the Exchange will consider the

suspension of trading in, or removal

from listing of, a series of TIRs when

any of the following circumstances

arise: (1) The trust has more than sixty

days remaining until termination and

there are fewer than 50 record and/or

beneficial holders of TIRs for 30 or more

consecutive trading days; (2) the trust

has fewer than 50, 000 receipts issued

and outstanding; (3) the market value of

all receipts issued and outstanding is

less than $1 million; (4) such other

event occurs or conditions exists which,

in the opinion of the Exchange, makes

further dealings on PCXE inadvisable.

These flexible criteria will allow the

Exchange to avoid delisting TIRs (and

possibly terminating the trust) due to

relatively brief fluctuations in market

conditions that may cause the numbers

of holders to vary. The Exchange will

not, however, apply these delisting

criteria for the initial 12-month period

following the formation of a trust and

commencement of trading on the PCXE.

In addition, if the number of companies

represented by the deposited securities

drops to fewer than nine, and each time

the number of companies is reduced

thereafter, the Exchange will consult

with the Commission to confirm the

appropriateness of the continued listing

of the TIRs.

e. PCXE Rules Applicable to Trading

of TIRs. Dealings in TIRs on the PCXE

will be conducted pursuant to the

PCXE’s equity trading rules. PCXE’s

general dealing and settlement rules

will apply, including its rules on

clearance and settlement of securities

transactions and its equity margin rules.

Other generally applicable PCXE equity

rules and procedures will also apply,

including, among others, rules

governing the Intermarket Trading

System, priority of orders, operational

21800 Federal Register / Vol. 66, No. 84 / Tuesday, May 1, 2001 / Notices

14PCXE’s rules relating to odd lot executions will

not apply because the trust issued receipts will be

traded only in round lots or round lot multiples. In

addition, the Exchange understands that the

Commission has provided an exemption from the

short sale rule, Rule 10a–1 under the Act (17 CFR

240.10a–1) for transactions in securities issued

under the TIRs program. See S.E.C. Exemption

Letter, 1999 WL 1038048 (S.E.C.). the Exchange will

issue a notice to its members detailing the terms of

the exemption.

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

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

17 15 U.S.C. 78f(b)(5).

18 17 CFR 240.19b–4(e).

19 15 U.S.C. 78f(b)(5). In approving these rules,

the Commission has considered their impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

20See e.g, Securities Exchange Act Release No.

42056 (October 22, 1999), 64 FR 58870 (November

1, 1999) (CHX); Securities Exchange Act Release

No. 41892 (September 21, 1999), 64 FR 52559

(September 29, 1999) (Amex).

and regulatory trading halts, and

responsibilities of specialists.14

The Exchange’s surveillance

procedures for TIRs will be similar to

the procedures for portfolio depository

receipts and will incorporate and rely

upon existing surveillance systems.

f. Disclosure and Dissemination of

Information. The Exchange will

distribute an information circular to its

members in connection with the trading

of TIRs. It will discuss the special

characteristics and risks of trading this

type of security, including the fact that

TIRs are not individually redeemable.

Specifically, the circular, among other

issues, will discuss what TIRs are, how

they are created, the requirement that

member and member firms deliver a

prospectus to investors purchasing TIRs

prior to or concurrently with the

confirmation of a TIRs transaction,

applicable PCXE rules, dissemination

information, trading information, and

the applicability of suitability rules. In

addition, the circular will inform

members of specific PCXE policies, such

as trading halts and market conditions

particular to such securities.

2. Basis

The Exchange believes that the

proposed rule change is consistent with

section 6(b) of the Act,15 in general, and

furthers the objectives of section

6(b)(5),16 in particular, in that it is

designed to promote just and equitable

principles of trade, to enhance

competition and to protect investors and

the public interest.

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. 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.

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 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 PCX. All

submissions should refer to File No.

SR–PCX–2001–01 and should be

submitted by May 22, 2001.

IV. Commission’s Findings and Order

Granting Accelerated Approval of

Proposed Rule Change

After careful review, the Commission

finds that the proposed rule change is

consistent with the requirements of

section 6(b)(5) of the Act 17 and the rules

and regulations thereunder applicable to

a national securities exchange.

Specifically, the Commission finds that

the proposal to provide standards to

permit listing and trading of trust issued

receipts pursuant to Rule 19b–4(e) 18

furthers the intent of that rule by

facilitating commencement of trading in

these securities without the need for

notice and comment and Commission

approval. By establishing listing

standards, the proposals should reduce

PCX’s regulatory burden, as well as

benefit the public interest, by enabling

PCX to bring qualifying products to the

market more quickly. Accordingly, the

Commission finds that PCX’s proposal

will promote just and equitable

principles of trade, foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in

securities, and, in general, protect

investors and the public interest

consistent with section 6(b)(5) of the

Act.19

As described above, the Commission

has previously approved similar Amex

and CHX rules that permit the listing

and trading of individual trust issued

receipts.20 In approving these securities

for trading, the Commission considered

their structure, their usefulness to

investors and the markets, and the

Exchanges’ rules and surveillance

programs that govern their trading. The

Commission concluded then that

securities approved for listing under

those rules would allow investors to: (1)

Respond quickly to changes in the

overall securities markets generally and

for the industry represented by a

particular trust; (2) trade, at a price

disseminated on a continuous basis, a

single security representing a portfolio

of securities that the investor owns

beneficially; (3) engage in hedging

strategies similar to those used by

institutional investors; (4) reduce

transactions costs for trading a portfolio

of securities; and (5) retain beneficial

ownership of the securities underlying

the trust issued receipts. The

Commission notes that PCX’s proposed

standards are substantially similar to the

Amex and CHX standards. The

Commission therefore believes that trust

issued receipts that satisfy PCX’s

proposed standards should produce the

same benefits to PCX and to investors.

The Commission further believes that

adopting listing standards for these

securities and applying Rule 19b–4(e)

should fulfill the intended objective of

that rule by allowing those products that

satisfy the listing standards to start

trading without the need for notice and

comment and Commission approval.

PCX’s ability to rely on Rule 19b–4(e)

potentially reduces the time frame for

bringing these securities to the market,

or for permitting the trading of these

securities pursuant to UTP, and thus

enhances investors’ opportunities. The

Commission notes that it maintains

regulatory oversight over any products

listed under the generic standards

through regular inspection oversight.

The Commission finds that PCX’s

proposal contains adequate rules and

procedures to govern the listing and

trading of trust issued receipts pursuant

to Rule 19b–4(e) on the PCX, or

pursuant to UTP. All trust issued receipt

products listed under the standards will

be subject to the full panoply of PCX

rules and procedures that now govern

both the trading of trust issued receipts

and the trading of equity securities on

the Amex and CHX, including, among

Federal Register / Vol. 66, No. 84 / Tuesday, May 1, 2001 / Notices 21801

21 15 U.S.C. 78f(b)(5).

22See note 22, supra.

23 15 U.S.C. 78s(b).

24 15 U.S.C. 78f(b)(6).

25 15 U.S.C. 78s(6)(2).

26 17 CFR 200.30–3(a)(12)

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

2 17 CFR 240.19b–4.

3 In Amendment No. 1, the PCX re-designated the

filing as a submission pursuant to section 19(b)(2)

of the Act, 15 U.S.C. 78s(b)(2), rather than section

19(b)(3)(A) of the Act, 15 U.S.C. 78s(b)(3)(A). In

Amendment No. 2, the PCX added rule text to

provide that the Auto-Ex-Between-the-Quotes

feature would not permit execution of orders at

prices that trade through other markets. See letters

from Cindy L. Sink, Senior Attorney, Regulatory

Policy, PCX, to Nancy Sanow, Assistant Director,

Division of Market Regulation, SEC, dated January

2, 2001 (‘‘Amendment No. 1’’), and March 29, 2001

(‘‘Amendment No. 2’’).

others, rules and procedures governing

trading halts, disclosures to members,

responsibilities of the specialist,

account opening and customer

suitability requirements, the election of

a stop or limit order, and margin.

The Commission further finds that: (1)

By requiring that the underlying

securities in a trust issued receipt be

registered under Section 12 of the Act

and listed on a national securities

exchange or Nasdaq, and (2) by

establishing minimum values for the

number of outstanding receipts, average

daily trading volume, average daily

dollar volume, and public float, the

Exchange’s proposed listing criteria will

help to ensure that a minimum level of

liquidity will exist to allow for the

maintenance of fair and orderly markets

for those trust issued receipts listed and

traded pursuant to Rule 19b–4(e). The

Commission believes that these listing

criteria will help to ensure that no

security underlying a trust issued

receipt will be readily susceptible to

manipulation, while permitting

sufficient flexibility in the construction

of various trust issued receipts to meet

investors’ needs. The Commission

further believes that these criteria

should serve to ensure that the

underlying securities of such trust

issued receipts are well capitalized and

actively traded, which will help to

ensure that U.S. securities markets are

not adversely affected by the listing and

trading of new trust issued receipts

under Rule 19b–4(e). Accordingly, the

Commission finds that these criteria are

consistent with section 6(b)(5) of the

Act,21 because they serve to prevent

fraudulent or manipulative acts;

promote just and equitable principles of

trade; remove impediments to and

perfect the mechanism of a free and

open market and a national market

system; and protect investors and the

public interest.

Additionally, as the Commission

noted in its previous review and

approval of CHX and Amex Rules, the

Exchange’s delisting criteria allows it to

consider the suspension of trading and

the delisting of a trust issued receipt if

an event occurs that makes further

dealings in such securities inadvisable.

This will give the Exchange flexibility to

delist trust issued receipts if

circumstances warrant.

The Commission notes that, in

connection with its previous review and

approval of CHX and Amex Rules, it

approved similar applicable minimum

price increments, surveillance

procedures, and disclosure and

prospectus delivery requirements for

trust issued receipts.22 In accord with

these previous findings, the

Commission believes that PCX’s

proposed rules will provide adequate

safeguards to prevent manipulative acts

and practices and to protect investors

and the public interest. Further, the

Commission believes that the proposal

will ensure that investors have

information that will allow them to be

adequately apprised of the terms,

characteristics, and risk of trading trust

issued receipts.

Finally, PCX will file Form 19b–4(e)

with the Commission within five

business days of commencement of

trading a trust issued receipt under the

listing standards and will comply with

all Rule 19b–4(e) recordkeeping

requirements.

The Commission finds good cause for

approving the proposed rule change

(SR–PCX–2001–01) prior to the thirtieth

day after the date of publication of

notice thereof in the Federal Register.

The Commission notes that the

proposed rule change is similar to rules

previously approved by the Commission

for Amex and CHX, and that is concerns

issues that previously have been the

subject of a full comment period

pursuant to section 19(b) of the Act.23

The Commission does not believe that

the proposed rule change raises novel

regulatory issues that were not

addressed in the previous filings.

Moreover, the Commission believes that

approving the listing and trading of TIRs

on the PCX will increase industry

competitiveness by providing an

additional venue for the trading of such

issues, to the benefit of the investor.

Accordingly, the Commission finds that

there is good cause, consistent with

section 6(b)(5) of the Act,24 to approve

the proposal on an accelerated basis,

and before expiration of the period for

filing comments.

V. Conclusion

It is therefore ordered, pursuant to

section 19(b)(2) of the Act,25 that the

proposed rule change (SR–PCX–2001–

01) is hereby approved on an

accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.26

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–10746 Filed 4–30–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44216; File No. SR–PCX–

00–48]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the Pacific Exchange,

Inc. Relating to Auto-Ex Between-theQuotes

April 24, 2001.

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 December

13, 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 and

II below, which Items have been

prepared by the Exchange. Amendment

Nos. 1 and 2 to the proposed rule

change were filed on January 3, and

April 2, 2001, respectively.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons and to

approve it on an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The PCX is proposing to effect a

change to its Automatic Execution

System (‘‘Auto-Ex’’) that will allow

small-sized customer option orders that

improve the PCX best bid or offer

(‘‘BBO’’) to be automatically executed

by the Auto-Ex System. Below is the

text of the proposed rule change. New

text is in italics.

Pacific Exchange, Inc. Constitution and

Rules

* * * * *

Rule 6 Options Trading Automatic Execution

System

¶ 5231

Rule 6.87(a)–(1)—No change.

(m) Auto-Ex-Between-the Quotes. Lead

Market Makers may, at their discretion,

employ the Auto-Ex-Between-the-Quotes