[Federal Register Volume 59, Number 205 (Tuesday, October 25, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26436]


[[Page Unknown]]

[Federal Register: October 25, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34849; File No. SR-PSE-94-22]

 

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by Pacific Stock Exchange, Inc., Relating to the Execution of 
Cross Transactions on the PSE Equities Floors

October 18, 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 August 
18, 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. On 
October 13, 1994, the Exchange submitted Amendment No. 1.\1\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\See letter from Michael Pierson, Senior Attorney, PSE, to 
Sandra Sciole, Commission, dated October 10, 1994. In Amendment No. 
1 the PSE (1) Divided the original proposed rule change into two 
filings by removing proposed commentary .06 from this filing and 
making it a separate filing; and (2) changed the minimum number of 
shares for eligibility under the commentary from 10,000 to 25,000 to 
mirror the comparable Amex and NYSE Rules (NYSE Rule 72(b) and Amex 
Rule 126(g)).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to add a new commentary to its Rule 
5.14(b), relating to the execution of cross transactions on the 
Equities Floors. The text of the proposed rule change is as follows: 
italicizing indicates new language:
    Rule 5.14(a)--No change.
    Rule 5.14(b)--No change.
    Commentary .01--.04--No change.
    .05  Agency orders to cross 25,000 shares or more at or within the 
prevailing quotation will be permitted to establish precedence without 
regard to priority of existing bids or offers at that price. Members 
will be allowed to better the proposed cross price, but in doing so 
shall be required to satisfy all other existing bids or offers at that 
price. For purposes of this Commentary .05, proprietary orders of 
members, member organizations, and non-member broker dealers shall not 
be considered ``agency.''

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 PSE is proposing to amend its rules regarding the execution of 
stock cross transactions (i.e., Rules 5.14(a) and 5.14(b)) by adding a 
new commentary to Rule 5.14(b). Proposed Commentary .05 will govern 
large agency crosses.
    Proposed Commentary .05. Proposed Commentary .05 is designed to 
permit the execution of ``clean'' agency crosses of 25,000 shares or 
more at or within the prevailing quotation without regard to the 
priority of existing bids or offers.
    As with the Rule 72(b) of the New York Stock Exchange (``NYSE'') 
and the Rule 126(g), Commentary .02, of the American Stock Exchange 
(``Amex''), this proposal to allow ``clean'' crosses is designed to 
facilitate the execution of agency cross transaction at the PSE. 
Although the proposal would allow such cross transactions to be 
executed without regard to priority of existing bids or offers, it will 
still specifically allow members an opportunity to better the price of 
the cross transaction.
    The PSE has also written this new rule with a specific limitation 
that it be allowed only for ``agency'' order, i.e. non-proprietary 
orders of members, member organizations and non-member broker/dealers. 
This approach to agency orders is consistent with that taken by the 
Amex and NYSE. It is designed to provide an environment for the 
facilitation of true agency crosses without giving an unfair advantage 
to the proprietary orders of members, member organizations or non-
member broker/dealers over other orders being held in the specialist 
books.
2. Statutory Basis
    The Exchange believes that the proposed rule change 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 promote just and equitable principles of trade, 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 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 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, 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 at 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 the PSE. All 
submissions should refer to File No. SR-PSE-94-22 and should be 
submitted by November 15, 1994.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-26436 Filed 10-24-94; 8:45 am]
BILLING COCE 8010-01-M