[Federal Register Volume 59, Number 60 (Tuesday, March 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7283]


[[Page Unknown]]

[Federal Register: March 29, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33799; File No. SR-PSE-94-2]

 

Self-Regulatory Organizations; Filing of Proposed Rule Change by 
the Pacific Stock Exchange, Inc. (``PSE'') Relating to Its Crossing 
Session Pilot Program.

March 22, 1994.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S. 78s(b)(1), notice is hereby given that on January 7, 
1994, 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 self-regulatory organization. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.\1\
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    \1\Concurrently with this notice, the Commission is also 
publishing for comment proposals submitted by the Chicago Stock 
Exchange, Inc., the American Stock Exchange Inc., the Boston Stock 
Exchange, Inc., the Philadelphia Stock Exchange, Inc. and the New 
York Stock Exchange, Inc., to request permanent approval for their 
respective programs which provide for executions of securities after 
regular trading hours. See File Nos. SR-CHX-93-23; BSE-93-24; SR 
Amex-93-15; SR-Phlx-94-8; and SR-NYSE-93-50.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PSE requests permanent approval of its Crossing Session pilot 
program, under which certain designated limit orders on the PSE 
specialists' books are afforded price protection based on the primary 
market.\2\ On February 1, 1994, the PSE's pilot program was extended 
until April 30, 1994.\3\
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    \2\On June 13, 1991, the Commission approved, on a pilot basis, 
File No. SR-PSE-91-21, which adopted the PSE Crossing Session 
Program. See Securities Exchange Act Release No. 29305 (June 13, 
1991), 56 FR 28208 (June 19, 1991) (order approving File No. SR-PSE-
91-21) (PSE Approval Order). The Exchange's procedures provide 
primary market protection for customer GTX orders (good until 
canceled, executable in the afternoon session) in securities listed 
on the NYSE and on the Amex and traded during the after-hours 
sessions of those Exchanges. The New York Stock Exchange (``NYSE'') 
initiated its Off-Hours trading (``OHT'') sessions in June 1991. See 
Securities Exchange Act Release No. 29237 (May 24, 1991), 56 FR 
24853 (May 31, 1991) (approving File Nos. SR-NYSE-90-52 and NYSE-90-
53). The American Stock Exchange, Inc. (``Amex'') established an 
after-hours trading facility in August 1991. See Securities Exchange 
Act Release No. 29515 (August 2, 1991), 56 FR 37736 (August 8, 1991) 
(approving File No. SR-Amex-91-15). The Commission approved 
extensions of the NYSE. Amex and PSE pilots, as well as pilots by 
other regional exchanges until January 31, 1994 and further extended 
the pilots until April 30, 1994. See Securities Exchange Act Release 
Nos. 32367 (May 25, 1993), 58 FR 31570 (June 3, 1993), and 33562 
(February 8, 1994), 59 FR 5792 (February 8, 1994).
    \3\See Securities Exchange Act Release No. 33562, supra note 2.
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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

1. Purpose
    The purpose of the proposed rule change is to request permanent 
approval of the Exchange's price protection of limit orders based on 
after-hours prints in a primary market. On June 13, 1991, the 
Commission approved, on a pilot basis, the PSE's proposed rule change 
to provide primary market protection to orders that have been entered 
with the PSE but designated to receive the execution price established 
in the primary market's after-hours session.\4\ The Exchange submitted 
the proposal as a competitive response to the NYSE's Off-Hours Trading 
Facility.\5\ On June 13, 1991, the Commission approved similar pilot 
programs by the BSE, Phlx, and CHX.\6\
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    \4\See Securities Exchange Act Release No. 29305, supra note 2.
    \5\See Securities Exchange Act Release No. 29237, supra note 2.
    \6\See Securities Exchange Act Release No. 29305, supra note 2. 
On August 30, 1991, the Commission approved the portion of File No. 
SR-PSE-91-21 relating to the extension of the hours of the PSE's 
auction market trading session for an additional twenty minutes to 
1:50 p.m. (PT). See Securities Exchange Act Release No. 29631 
(August 30, 1991), 56 FR 46025 (September 9, 1991). In addition, the 
portion of File No. SR-PSE-91-21 relating to the creation and 
trading on the Exchange of a new type of order, one-side (``OS'') 
closing price orders, is currently under reviewed by the Commission.
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    Under the Crossing Session program, Exchange specialists are 
required to provide primary market protection for orders designated 
``GTX'' (orders on the PSE specialists' limit order books that are good 
'til cancelled and executable through the Crossing Session). Orders so 
designated become eligible for migration to the PSE's 1 p.m. to 1:30 
p.m. (PS) auction market trading session\7\ and to the Crossing Session 
for possible execution at the primary market's closing price. The 
Crossing Session, which serves as an order protection environment vis-
a-vis NYSE Crossing Session I, occurs from 1:50 p.m. to 2 p.m. (PT). 
Orders that are designated as GTX but that are not filled remain on the 
PSE specialist limit order books and retain their priority.
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    \7\This session was later extended to 1:50 p.m. (PT). See 
Securities Exchange Act Release No. 29631, supra note 6.
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    The Commission approved the Crossing Session program for a 
temporary period ending on May 24, 1993.\8\ The Commission subsequently 
approved extensions of the program to January 31, 1994 and April 30, 
1994.\9\ The Commission requested the PSE to submit a report to the 
Commission describing the PSE's experience with the new program during 
the approval period, particularly in regard to certain questions 
designated in the Crossing Session Approval Order.\10\ In response 
thereto, the Exchange has submitted reports to the Commission dated 
April 30, 1993, and September 30, 1993. The Commission requested in its 
order extending the pilot until April 30, 1994, that the Exchange 
submit to the Commission by March 15, 1994, an updated report 
concerning the pilot activity through February 28, 1994.\11\ This 
updated report will assist the Commission in considering the Exchange's 
request for permanent approval prior to the April 30, 1994 expiration 
of the pilot program. The Exchange now seeks permanent approval of the 
program.
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    \8\See supra note 2.
    \9\See supra note 2.
    \10\See supra note 2.
    \11\See supra note 2.
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2. Statutory Basis
    The proposed rule change is consistent with Sections 6(b)(5) and 
11A of the Act in that it is designed to promote just and equitable 
principles of trade, perfect the mechanism of a free and open national 
market system, and, in general, further investor protection and the 
public interest in fair and orderly markets on national securities 
exchanges.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes that no burdens 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

    No comments were received 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 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, 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 at the 
Commission's Public Reference Section, 450 Fifth Street, NW., 
Washington, DC 20549. Copies of such filing will also be available for 
inspection and copying at the principal office of the PSE. All 
submissions should refer to File No. SR-PSE-94-2 and should be 
submitted by April 19, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7283 Filed 3-28-94; 8:45 am]
BILLING CODE 8010-01-M