34916 Federal Register / Vol. 61, No. 129 / Wednesday, July 3, 1996 / Notices

1The classification criteria is set forth in NASD

Rule 4613(a)(2) and the footnote to NASD Rule

4710(g).

2Notwithstanding the NASD’s announcement in

NTM 96–40 that Microsoft and U.S. Robotics are

scheduled to be moved to the 500-share SOES tier

size level, the NASD has determined that The

Nasdaq Stock Market will keep these stocks in the

1,000-share tier level. Even though these stocks fall

within the 500-share tier level, pursuant to the

criteria for determining tier levels, the NASD has

determined to keep these stocks at the 1,000-share

level because of their large market capitalization

and high trading volume. See, letter to Howard L.

Kramer, Associate Director, Office of Market

Supervision, Division of Market Regulation, SEC,

from Thomas R. Gira, Associate General Counsel,

The Nasdaq Stock Market, Inc., dated June 25, 1996. 3 17 CFR 200.30–3(a)(12) (1989).

may be examined at the places specified

in Item IV below. The NASD 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 purpose of the rule change is to

effectuate Nasdaq’s periodic

reclassification of NNM securities into

appropriate tier sizes for purposes of

determining the maximum size order for

a particular security eligible for

execution through SOES and the

minimum quote size requirements for

Nasdaq market makers in NNM

securities. Nasdaq periodically reviews

the SOES tier size applicable to each

NNM security to determine if the

trading characteristics of the issue have

changed so as to warrant a tier size

adjustment. Such a review was

conducted using data as of March 31,

1996, pursuant to the following

established criteria:1

NNM securities with an average daily nonblock volume of 3,000 shares or more a day,

a bid price less than or equal to $100, and

three or more market makers are subject to

a minimum quotation size requirement of

1,000 shares and a maximum SOES order

size of 1,000 shares;

NNM securities with an average daily nonblock volume of 1,000 shares or more a day,

a bid price less than or equal to $150, and

two or more market makers are subject to a

minimum quotation size requirement of 500

shares and a maximum SOES order size of

500 shares; and

NNM securities with an average daily nonblock volume of less than 1,000 shares a day,

a bid price less than or equal to $250, and

less than two market makers are subject to a

minimum quotation size requirement of 200

shares and a maximum SOES order size of

200 shares.

Pursuant to the application of this

classification criteria, 728 NNM

securities will be reclassified effective

July 1, 1996. These 728 NNM securities

are set out in the NASD’s Notice To

Members 96–40 (June 1996).2

In ranking NNM securities pursuant

to the established classification criteria,

Nasdaq followed the changes dictated

by the criteria with two exceptions.

First, an issue was not moved more than

one tier size level. For example, if an

issue was previously categorized in the

1,000-share tier size, it would not be

permitted to move to the 200-share tier

even if the reclassification criteria

showed that such a move was

warranted.

In adopting this policy, Nasdaq was

attempting to maintain adequate public

investor access to the market for issues

in which the tier size level decreased

and to help ensure the ongoing

participation of market makers in SOES

for issues in which the tier size level

increased. Second, for securities priced

below $1 where the reranking called for

a reduction in tier size, the tier size was

not reduced.

The NASD believes that the proposed

rule change is consistent with Section

15A(b)(6) of the Act. Section 15A(b)(6)

requires, among other things, that the

rules of the NASD governing the

operation of The Nasdaq Stock Market

be designed to foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, and

processing information with respect to

facilitating transactions in securities,

and to remove impediments to and

perfect the mechanism of a free and

open market. The NASD believes that

the reclassification of NNM securities

within SOES tier size levels and

minimum quotation size levels will

further these objectives by providing an

efficient mechanism for small, retail

investors to execute their orders on

Nasdaq and by providing investors with

the assurance that they can effect trades

up to a certain size at the best prices

quoted on Nasdaq.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD believes that the proposed

rule change will not 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

The proposed rule change has become

effective immediately pursuant to

Section 19(b)(3)(A)(i) of the Act and

subparagraph (e) of Rule 19b–4

thereunder in that the reranking of NNM

securities into appropriate SOES tier

sizes was done pursuant to the NASD’s

stated policy and practice with respect

to the administration and enforcement

of two existing NASD rules. Further, in

the SOES Tier Size Order, the

Commission requested that the NASD

provide this information as an

interpretation of an existing NASD rule

under Section 19(b)(3)(A) of the Act.

At any time within sixty (60) days of

the filing of a proposed rule change

pursuant to Section 19(b)(3)(A) of the

Act, the Commission may summarily

abrogate the rule change if it appears to

the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

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 July 24, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16923 Filed 7–2–96; 8:45 am]

BILLING CODE 8010–01–M
Federal Register / Vol. 61, No. 129 / Wednesday, July 3, 1996 / Notices 34917

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

2Previously, market makers were restricted to

Primary Appointment Zones comprising one

trading post or two contiguous trading posts. See

Securities Exchange Act Release No. 36370 (October

13, 1995), 60 FR 54273 (approving increase from

two to six in the maximum number of trading posts

that may be included in each market maker’s

Primary Appointment Zone).

3PSE Rule 6.35, Commentary .03 provides an

exception for unusual circumstances.

4See also File No. SR–PSE–96–12 (proposal to

amend Rule 6.40).

[Release No. 34–37365; File No. SR–PSE–

96–17]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Pacific Stock Exchange, Inc.

Relating to Joint Accounts

June 25, 1996.

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

Securities Exchange Act of 1934

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

June 11, 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. 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 PSE proposes to amend its rules

to eliminate a provision that prohibits

members who are registered to trade for

the same joint account from having

overlapping primary appointment zones

on the Options Floor.

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

PSE Rule 6.35 currently provides that

each market maker shall be assigned a

Primary Appointment Zone comprising

a minimum of one trading post up to a

maximum of six contiguous trading

posts.2 Under Commentary .03 to PSE

Rule 6.35, at least 75% of the trading

activity of a market maker (measured in

terms of contract volume per quarter)

shall be in classes of option contracts to

which his or her primary appointment

extends.3

With regard to joint accounts, PSE

Rule 6.84, Commentary .05 currently

provides that the primary appointment

of a market maker may not include

trading posts which constitute the

primary appointment of any market

maker with whom he or she has a joint

account. The rule further provides that,

for the purposes of evaluating market

maker performance in accordance with

PSE Rule 6.37, Commentary .04,

contract volume in the joint account

will be assigned to the participants who

effected the transactions for the joint

account, under the same guidelines as if

they effected the transactions for their

own account.

The Exchange proposes to eliminate

the provision in Commentary .05 to

Rule 6.84 that prohibits joint account

participants from having overlapping

primary appointment zones. The

Exchange believes that this rule places

an unnecessary burden on member

firms with joint accounts that may

desire to have overlapping primary

zones for their market makers in order

to allow for continuous coverage when

participant market makers are

temporarily absent from the floor due to

illness or vacation. The Exchange also

believes that the current procedure of

requiring substitute market makers to

seek an exemption from Rule 6.35 (or

alternatively to assure that the volume

of their trading outside their primary

zone does not exceed 25% of their total

volume), is not efficient. Moreover, the

Exchange believes that Rule 6.40,

Financial Arrangements of Market

Makers, which prohibits participants in

the same joint account from trading in

the same trading crowd at the same

time, will address any concerns that

joint account participants may attempt

to dominate unfairly the market in a

particular option issue or option series.4

Finally, the Exchange proposes, for

purposes of greater clarity, to eliminate

the cross-reference to Rule 6.37,

Commentary .04 that is contained in

Rule 6.84, Commentary .05 and to

replace it with a cross reference to Rule

6.35, Commentary .03.

The Exchange believes that the

proposal is consistent with Section 6(b)

of the Act, in general, and Section

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

designed to facilitate transactions in

securities, to remove impediments to a

free and open market, and to promote

just and equitable principles of trade.

(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 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 on the proposed

rule change 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, 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. Copies of such filing

will also be available for inspection and

copying at the principal office of the

above-mentioned self-regulatory

organization. All submissions should
34918 Federal Register / Vol. 61, No. 129 / Wednesday, July 3, 1996 / Notices

5 17 CFR 200.30–3(a)(12).

1Currently, PSE Rule 1.10(a), ‘‘Initial, Transfer

and Processing Fees,’’ also provides for interfirm

and intrafirm transfer fees. In a separate rule filing,

the PSE has proposed to delete the transfer fees

from PSE Rule 1.10(a). Under that proposal, PSE

Rule 1.23, ‘‘Transfer of Membership,’’ will govern

membership transfers but will not contain a fee

schedule. See Securities Exchange Act Release No.

37076 (April 5, 1996), 61 FR 16152 (April 11, 1996)

(notice of filing of proposed rule change for File No.

SR–PSE–96–07).

2The $100 fee for temporary membership

transfers applies to transfers lasting for a

consecutive period lasting from two days to less

than 30 days.

3According to the PSE, temporary transfers of

membership occur only between members of the

same firm, not between firms. Thus, the proposal

eliminates an inaccurate reference to temporary

‘‘interfirm’’ transfers of membership. Telephone

conversation between Michael Pierson, Senior

Attorney, Market Regulation, PSE, and Yvonne

Fraticelli, Attorney, Office of Market Supervision,

Division of Market Regulation, Commission, on

June 24, 1996.

4 In addition, the Schedule of Rates provides a

$250 fee for permanent intrafirm or interfirm

transfers of membership.

5The $100 fee for a temporary transfer of

membership was implemented in 1995. See

Securities Exchange Act Release No. 35817

(September 5, 1995), 60 FR 47417 (September 12,

1995) (Notice of filing and immediate effectiveness

for File No. SR–PSE–95–19).

6See note 3, supra.

refer to File No. SR–PSE–96–17 and

should be submitted by July 24, 1996.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.5

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–16924 Filed 7–2–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37373; File No. SR–PSE–

96–22]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Pacific Stock Exchange, Inc. Relating

to the Establishment of a $50 Fee for

One-Day Transfers of Membership

June 26, 1996.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on June 21, 1996, the

Pacific Stock Exchange, Inc. (‘‘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 PSE. 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

Currently, the PSE’s Schedule of Rates

for Exchange Services (‘‘Schedule of

Rates’’) provides a fee of $100 for

temporary intrafirm or interfirm

transfers of membership.1 The PSE

proposes to amend the Schedule of

Rates to: (1) establish a fee of $50 for

one-day intrafirm transfers of

membership; (2) specify that a

‘‘temporary’’ transfer of membership is

for a period of less than 30 days; 2 and

(3) eliminate a reference to ‘‘interfirm’’

temporary transfers of membership, so

that the $100 fee for temporary

membership transfers will apply solely

to temporary intrafirm transfers of

membership.3

The text of the proposed rule change

is available at the Office of the

Secretary, PSE, 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

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

prices 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 the

Statutory Basis for, the Proposed Rule

Change

Purpose

The PSE proposes to adopt a $50 fee

for members who transfer their

membership rights, on a one-day basis,

to other members of the same firm. This

change is intended to address situations

where floor members are unable to be

present on the trading floor for one day

and need to have substitute coverage on

the floor for that day. Under the

proposal, members who expect to be

away from the floor for one day will

notify the Exchange of the proposed

transfer and the Exchange will bill them

$50.

The Schedule of Rates currently

provides for a fee of $100 for

‘‘temporary’’ transfers of membership.4

That fee is intended to cover transfers of

membership that last longer than one

day (but less than 30 days), such as

when a floor member takes a vacation.

The Exchange believes that the

proposed one-day intrafirm transfer fee

will provide an equitable alternative to

the $100 temporay transfer fee for

members who are away from the floor

for just one day. In addition, the PSE

notes that the proposal will address

more directly situations in which a

member transfers his or her membership

to another person, one a one-day basis,

on more than two separate occasions

during a 30-day period. In such

situations, the member would be

charged $50 for each one-day transfer of

membership. In addition, if a member

notifies the PSE of a one-day transfer,

and that member is later unable to

return to the floor for a consecutive

period of from two to 30 days, that

member would be charged a maximum

fee of $100.

The Exchange also proposes to amend

its Schedule of Rates with regard to

‘‘temporary’’ transfers of membership by

specifying that such transfers are for a

period of less than 30 days.5 In addition,

the PSE proposes to eliminate a

reference in the provision governing

temporary transfers to ‘‘interfirm’’

transfers of membership, so that the

$100 fee will apply solely to temporary

‘‘intrafirm’’ transfers of membership.6

Statutory Basis

The PSE believes that the proposal is

consistent with Section 6(b) of the Act,

in general, and with Section 6(b)(4), in

particular, in that it provides for the

equitable allocation of reasonable

charges among its members.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The PSE does not believe that the

proposed rule change will impose 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 on the proposed

rule change were neither solicited or

received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing rule change

establishes or changes a due, fee or

other charge imposed by the Exchange,

it has become effective pursuant to

Section 19(b)(3)(A) of the Act and

subparagraph (e) of Rule 19b–4

thereunder. At any time within 60 days

of the filing of the proposed rule change,

the Commission may summarily

abrogate such rule change if it appears