Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7249

if a substantial imbalance exists on the opposite

side of the market. See supra, notes 9–13 and

accompanying text. In those circumstances, the

stock would probably trade away from the large

imbalance, resulting in execution of orders on the

book.

15See, e.g., SEC. Report of the Special Study of

the Securities Markets of the Securities and

Exchange Commission, H.R. Doc. No. 95, 88th

Cong., 1st Sess. Pt. 2 (1963).

16No comments were received in connection with

the proposed rule change which implemented these

procedures. See 1991 Approval Order, supra, note

1.

17 15 U.S.C. 78s(b)(2) (1988).

18 17 CFR 200.30–3(a)(12) (1991).

1 15 U.S.C. 78s(b)(1) (1988).

conclusion is based, in large part, on the

Exchange’s one-day review of limit

orders against which orders were

stopped pursuant to this pilot program.

As part of this review, which focused on

three of the ten stocks receiving the

greatest number of stops, the NYSE

determined how often such book orders

were executed at their limit price by the

close of the day’s trading. In addition to

aggregated data, the Exchange provided

a detailed breakdown of the disposition

of each order.

The Commission has historically been

concerned that book orders get bypassed

when stock is stopped, especially in a

minimum variation market.15 Based on

the NYSE’s prior experience, the

Commission did not have sufficient

grounds to conclude that this longstanding concern had been alleviated.

The Commission acknowledges,

however, that the fourth monitoring

report proves new information on this

aspect of the pilot program. As a result,

the Commission finds that additional

time is necessary for the Commission to

review such information and to ensure

that Rule 116.30, as amended, does not

harm public customers with limit orders

on the specialist’s book.

Finally, the NYSE report describes its

compliance efforts (e.g., automated

surveillance, review of Floor Official

records, information memos, continuing

education). The Commission believes

that these programs provide specialists

with adequate notice of their

responsibilities. Similarly, the Exchange

has sufficient means to determine

whether a specialist complied with the

amendments’ order size and aggregate

share thresholds and, if not, whether

Floor Official approval was obtained for

larger parameters. The Commission

would expect the NYSE to take

appropriate action in response to any

instance of specialist non-compliance

with the pilot procedures. In

considering permanent approval of the

amendments to Rule 116.30, the

Commission would place great, weight

on the Exchange’s record in compliance

matters.

During the pilot extension, the

Commission requests that the Exchange

continue to monitor the effects of

stopping stock in a minimum variation

market and to provide additional

information where appropriate.

Moreover, if the Exchange determines to

request permanent approval of the pilot

program or an extension thereof beyond

July 21, 1995, the NYSE should submit

to the Commission a proposed rule

change by April 1, 1995.

The Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of the notice of filing

thereof. This will permit the pilot

program to continue on an

uninterrupted basis. In addition, the

procedures the Exchange proposes to

continue using are the identical

procedures that were published in the

Federal Register for the full comment

period and were approved by the

Commission.16

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,17 that the

proposed rule change (SR–NYSE–95–

02) is approved for a four month period

ending on July 21, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.18

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2902 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35313; File No. SR–PCC–

94–01]

Self-Regulatory Organizations; Pacific

Clearing Corporation; Notice of Filing

of a Proposed Rule Change Amending

Certain Provisions of the PCC’s Rules,

Participant Agreement, and Clearing

Fund Agreement

February 1, 1995.

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

Securities Exchange Act of 1934

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

November 28, 1994, the Pacific Clearing

Corporation (‘‘PCC’’) 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 primarily by PCC. 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

PCC proposes to correct certain

typographical errors in its rules and to

clarify certain provisions regarding post

capital in its standard participant

agreement and clearing fund agreement.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, PCC

included statements concerning the

purpose of and basis for the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. PCC 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

The primary purpose of PCC’s

proposed rule change is to correct

typographical errors to certain

provisions of PCC’s rules and to clarify

certain provisions of its standard

participant agreement and clearing fund

agreement relating to specialist post

capital.

Specifically, PCC proposes to correct

typographical errors to the Table of

Contents; PCC Rule 1.2(f), defining the

term ‘‘long position’’; PCC Rules 2.1(c)

and 2.1(d), addressing membership

qualifications and approval; and PCC

Rule 9.3(c)(iii) addressing specialist post

termination procedures. In addition,

PCC proposes to amend PCC Rule 5.2 to

clarify that any reductions to excess

post capital or a member’s clearing fund

deposit cannot be made for amounts

that would reduce the member’s post

capital or clearing fund deposit below

the minimum requirement.

With respect to the participant

agreement, PCC proposes to amend

certain paragraphs relating to post

capital. Paragraph 3.1(e)(iii) will be

amended to clarify that it refers to the

monitoring of post capital rather than

net capital as it currently states.

Paragraph 4.5 of the participant

agreement will be amended so that post

capital is distinguished from net capital.

Net capital, which is specified by PSE

Rule 2.1 and Rule 15c3–1 of the Act,

remains constant for a firm regardless of

the number of specialist posts it

operates. In contrast, post capital varies

because it represents the amount of

capital required to be maintained by a

firm based on the number of specialists
7250 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

2 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2Amendment No. 1 modified the filing by

providing that it be considered pursuant to Section

19(b)(2) of the Act rather than pursuant to Section

19(b)(3)(A) of the Act and by eliminating text

inadvertently placed in the proposed rule change as

originally filed. Letter from Carol A. Jameson,

Assistant Vice President and Assistant Counsel,

PTC, to Jonathan G. Katz, Secretary, Commission

(December 15, 1994.)

3Amendment No. 2 modified the filing by

requesting accelerated approval of the proposed

rule change and by clarifying the right of a

participant to appeal the imposition of the penalty

fee pursuant to PTC’s rules. Letter from Carol A.

Jameson, Assistant Vice President and Assistant

Counsel, PTC, to Jonathan G. Katz, Secretary,

Commission (January 3, 1995).

4Securities Exchange Act Release No. 35182

(December 30, 1994), 60 FR 2416.

posts it operates. Paragraph 4.9 of the

participant agreement is to be modified

to clarify that reductions to excess post

capital and to the clearing fund deposit

cannot be made in amounts that would

reduce these sums below their

respective minimum requirements.

Paragraph 4.9 of the participant

agreement also is being modified to

clarify that losses on a trial balance are

due on the fifteenth day of the month

following the month for which the trial

balance was issued.

Similarly, with regard to the clearing

fund agreement, PCC proposes to clarify

that the minimum contribution, as

defined in paragraph 5 of the clearing

fund agreement, made by a member firm

backing a specialist post will be applied

towards meeting the post capital

requirement. Currently, the clearing

fund agreement states that contributions

are to be credited towards the net

capital requirement.

PCC believes that the proposed rule

change is consistent with the

requirements of Section 17A of the Act

and the rules and regulations

thereunder applicable to PCC. The

technical corrections to PCC’s rules will

clarify PCC’s rules thereby advancing

the prompt and accurate clearance and

settlement securities transactions. In

addition, the clarifications regarding

specialist post capital and net capital

will assist PCC in safeguarding the

securities and funds which are in PCC’s

custody or control or for which PCC is

responsible.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

PCC believes that no burden will be

placed on competition as a result of the

proposed rule change.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Statements were neither solicited nor

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within thirty-five 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

ninety 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, N.W.,

Washington, D.C. 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

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of PCC. All submissions should

refer to File No. SR–PCC–94–01 and

should be submitted by February 28,

1995.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.2

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2973 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35299; File No. SR–PTC–

95–07]

Self-Regulatory Organizations;

Participants Trust Company; Order

Approving on an Accelerated Basis a

Proposed Rule Change Establishing a

Daily Penalty Fee Applicable to Late

Funding of Shortfalls in Participants’

Mandatory Deposits to the Participants

Fund

January 31, 1995.

On December 14, 1994, the

Participants Trust Company (‘‘PTC’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) a

proposed rule change (File No. SR–

PTC–94–07) pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’).1 The proposed rule

change establishes a daily penalty fee

applicable to late funding of shortfalls

in participants’ mandatory deposits to

the participants fund. On December 16,

1994, PTC filed Amendment No. 1 to

the proposed rule change.2 On January

5, 1995, PTC filed Amendment No. 2 to

the proposed rule change.3 The

Commission published notice of the

proposed rule change in the Federal

Register on January 9, 1995.4 No

comments were received. For the

reasons discussed below, the

Commission is approving the proposed

rule change on an accelerated basis.

I. Description

Pursuant to Rule 2 of Article V of

PTC’s rules, PTC maintains a

participants fund to secure obligations

of participants and limited purpose

participants to PTC and to provide PTC

with an additional source of cash

collateral to meet its temporary

financing needs. Each participant is

required to maintain a mandatory

deposit in the participants fund which

is calculated as a percentage of its

average gross debits over the previous

month’s three major settlement days.

The mandatory deposit is subject to a

minimum of $1 million and a maximum

of $10 million. A limited purpose

participant is required to maintain a

lower mandatory deposit because of the

limited nature of its activity in the

depository. At least $150 thousand of

the mandatory deposit must be made in

cash. The remainder may be made in

cash or United States Treasury

obligations with a remaining maturity of

one year or less.

The adequacy of each participant’s

mandatory deposit is evaluated monthly

based on the prior month’s activity.

Participants are notified of any shortfall

and required to fund the deficiency

within five business days. The securities

portion of the mandatory deposit is

marked-to-market weekly, and

participants are required to fund any

deficiency in this portion within two

business days.