[Federal Register Volume 59, Number 68 (Friday, April 8, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8401]


[[Page Unknown]]

[Federal Register: April 8, 1994]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33854; File No. SR-PSE-94-09]

 

Self-Regulatory Organizations; Filing and Order Granting 
Accelerated Approval of Proposed Rule Change by the Pacific Stock 
Exchange Relating to Extension of the Exchange's Lead Market Maker 
System Pilot Program

April 1, 1994.
    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 March 
31, 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 and II 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.

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

    The PSE requests an extension to its Lead Market Maker System 
(``LMM'') Pilot program until September 30, 1994. 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 self-regulatory organization 
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. 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

Introduction
    On January 17, 1990, the Commission approved, on a pilot basis, a 
PSE proposal to establish a Lead Market Maker system in order to 
enhance the ability of the Exchange to compete in a multiple trading 
environment.
    The Commission initially approved the LMM pilot program to continue 
for eighteen months to July 31, 1991.\1\ The Commission has granted two 
extensions to the pilot program in order for both the Commission and 
PSE to more closely examine the functioning of the pilot program.\2\ 
The PSE has submitted pilot program reports to the Commission on 
September 18, 1992 and July 26, 1993. On July 26, 1993, the Exchange 
requested permanent approval of the pilot program.\3\ The PSE is 
requesting this time extension in order to provide additional time for 
evaluation of the program.
---------------------------------------------------------------------------

    \1\See Securities Exchange Act Release No. 27631 (January 17, 
1990), 55 FR 2462 (January 24, 1990) (approving SR-PSE-89-27 and 
Amendment No. 1 thereto) (``Pilot Approval Order'').
    \2\See Securities Exchange Act Release No. 31063 (August 21, 
1992), 57 FR 39255 (August 28, 1992); and Securities Exchange Act 
Release No. 31635 (December 22, 1992), 57 FR 31635 (December 30, 
1992).
    \3\See File No. SR-PSE-93-16.
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act, in general, and furthers the objectives 
of section 6(b)(5), in particular, in that it will promote just and 
equitable principles of trade and will contribute to the protection of 
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 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

    The PSE has requested that the proposed rule change be given 
accelerated effectiveness pursuant to section 19(b)(2) of the Act.
    The Commission finds that the proposed rule change to extend the 
pilot program until September 30, 1994 is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and, in particular, the 
requirements of Section 6 and the rules and requirements thereunder.\4\ 
The Commission concludes, as it did when approving the commencement of 
the pilot program, that the PSE proposal may enhance the market-making 
mechanism on the PSE, thereby improving the markets for listed options 
on the Exchange. Specifically, the Commission believes the LMM pilot 
may improve the PSE's market making capabilities by creating long-term 
commitments to options classes. Moreover, the pilot program will 
continue with adequate due process safeguards in the LMM selection and 
termination procedures and retain procedures that prevent the misuse of 
material non-public LMM information by either an LMM or a broker-dealer 
affiliated with an LMM.
---------------------------------------------------------------------------

    \4\15 U.S.C. 78f(b) (1982).
---------------------------------------------------------------------------

    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register because the PSE has not 
indicated that there have been any problems associated with the 
operation of the LMM system. In addition, because the Commission has 
not received any adverse comments concerning the Exchange's pilot 
program, the Commission believes good cause exists to approve the 
extension of the pilot program on an accelerated basis to allow it to 
continue uninterrupted.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
argument 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 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-94-09 and should 
be submitted by April 29, 1994.
    It is therefore ordered, Pursuant to section 19(b)(2) of the 
Act,\5\ that the proposed rule change (File No. SR-PSE-94-09) is 
approved through September 30, 1994.

    \5\15 U.S.C. 78s(b)(2) (1982).
---------------------------------------------------------------------------

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
---------------------------------------------------------------------------

    \6\17 CFR 200.30-3(a)(12) (1993).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-8401 Filed 4-7-94; 8:45 am]
BILLING CODE 8010-01-M