[Federal Register Volume 60, Number 116 (Friday, June 16, 1995)]
[Pages 31751-31752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14796]


[Release No. 34-35836; File No. SR-PSE-95-11]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Stock Exchange, Inc., Relating to the Number of 
Trading Posts That May Be Included as Part of Each Market Maker's 
Primary Appointment Zone

June 9, 1995.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on April 7, 1995, 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.

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

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

    The PSE proposes to increase the number of trading posts that may 
be included as part of each market maker's primary appointment zone.

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.

[[Page 31752]]

(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    PSE Rule 6.35 currently requires each options market maker to 
select and maintain a primary appointment zone consisting of one or two 
trading posts.\2\ Pursuant to Rule 6.35, Commentary .03, at least 75% 
of the trading activity of each market maker (measured in terms of 
contract volume per quarter) must be in classes of option contracts to 
which such market maker's primary appointment zone extends. In 
addition, under the new short sale rule applicable to stocks traded in 
the Nasdaq market, the options market maker exemption to that rule is 
limited to stocks underlying options in which the market maker holds an 

    \2\PSE Rule 6.35 requires multiple posts to be contiguous, 
except under special circumstances.
    \3\See PSE Rule 4.19(c)(2).

    The Exchange proposes to amend Rule 6.35 in two respects: First, 
the maximum number of trading posts that could be included as part of 
each primary appointment zone would be increased from two to six. 
Second, the Options Appointment Committee could allow a market maker to 
exceed the six trading post maximum if special circumstances were to 
exist. Under the proposal, the largest number of issues a market maker 
could have within his or her primary appointment zone, in the absence 
of special circumstances, would be 108 (or 31% of the issues traded on 
the Options Floor).
    The Exchange believes that the current limit of two trading posts 
is unduly restrictive and places the PSE's options market makers at a 
competitive disadvantage in relation to market makers on other options 
exchanges. The Exchange further believes that its proposal will allow 
it the flexibility to respond promptly to any need for greater market 
maker participation that may arise in light of recent and anticipated 
increases in the number of options classes traded on the floor. The 
Exchange also believes that its proposal, if approved, would serve to 
assure adequate market maker coverage of all classes traded on the 
floor and to enhance the ability of the Exchange to provide deep and 
liquid markets and to provide for competitive equality among exchanges.
    The Exchange believes that its 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 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 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, 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 Section, 450 Fifth Street, NW., 
Washington, DC. 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 refer to File No. 
SR-PSE-95-11 and should be submitted by [insert date 21 days after the 
date of this publication].

    For the Commission to by the Division of Market Regulation, 
pursuant to delegated authority.\4\

    \4\17 CFR 200.30-(a)(12) (1994).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-14796 Filed 6-15-95; 8:45 am]