[Federal Register Volume 60, Number 137 (Tuesday, July 18, 1995)]
[Notices]
[Pages 36849-36851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17581]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35959; File No. SR-PSE-95-16]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Stock Exchange Incorporated Relating to
Violations of the Intermarket Trading System Rules
July 12, 1995.
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 8,
1995, the Pacific Stock Exchange Incorporated (``PSE'' or ``Exchange'')
filed with the
[[Page 36850]]
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 June 26, 1995,
the Exchange submitted to the Commission Amendment No. 1 to the
proposed rule change.\1\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
\1\ See letter from Michael Pierson, Senior Attorney, PSE, to
Jennifer S. Choi, Attorney, SEC, dated June 23, 1995. Amendment No.
1 withdraws the proposed changes to the Equity Floor Procedure
Advice 2-B because these changes have been approved already by the
Commission. See Securities Exchange Act Release No. 34760 (Sept. 30,
1994), 59 FR 50950 (Oct. 6, 1994) (approving File No. SR-PSE-94-13).
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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 amend its Minor Rule Plan so that it
includes violations of the Intermarket Trading System (``ITS'') rules,
which are set forth in PSE Rules 5.20-5.23. The text of the proposed
rule change is as follows [new text is italicized]:
para. 6133 Minor Rule Plan
Rule 10.13(a)-(h)--No change.
(i) Minor Rule Plan: Equity Floor Decorum and Minor Trading Rule
Violations
(i)(1)-(i)(8)--No change.
(i)(9) Failure to follow the provisions of the rules and
regulations governing the use of the Intermarket Trading System (ITS)
(Rules 5.20-5.23)
* * * * *
Minor Rule Plan
Recommended Fine Schedule
(Pursuant to Rule 10.13(f))
Rule 10.13(i)
Equity Floor Decorum and Minor
Trading Rule Violations
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1st 2nd 3rd
violation violation violation
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1-8--No change.
9--Failure to follow the provisions of
the rules and regulations governing
the use of the Intermarket Trading
System (ITS) (Rules 5.20-5.23)........ $500 $1,000 $2,000
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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 Exchange's Minor Rule Plan (``MRP''),\2\ set forth in PSE Rule
10.13, provides that the Exchange may impose a fine not to exceed
$5,000 on any member, member organization, or person associated with a
member or member organization, for any violation of an Exchange rule
that has been deemed to be minor in nature and approved by the
Commission for inclusion in the MRP. Rule 10.13, subsections (h)-(j),
set forth the specific Exchange rules deemed to be minor in nature.
\2\ The MRP was initially approved by the Commission in 1985.
See Securities Exchange Act Release No. 22654 (Nov. 21, 1985), 50 FR
48853 (Nov. 27, 1985). Since 1985, the MRP has been amended several
times. See, e.g., Securities Exchange Act Release No. 34322 (July 6,
1994), 59 FR 35958 (July 14, 1994).
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The Exchange is proposing to add the following provision to the MRP
as Rule 10.13(i)(9): ``Failure to follow the provisions of the rules
and regulations governing the use of the Intermarket Trading System
(ITS) (PSE Rules 5.20-5.23).'' The Exchange is also proposing to amend
its Recommended Fine Schedule to establish the following recommended
fines (on a running two-year basis) for violations of the ITS rules and
regulations: $500 for a first-time violation; $1,000 for a second-time
violation; and $2,000 for a third-time violation.\3\
\3\ For a discussion of the Exchange's Recommended Fine
Schedule, see Securities Exchange Act Release No. 34322 (July 6,
1994), 59 FR 35958 (July 14, 1994).
The Exchange believes that the ITS rules proposed to be added to
the MRP are either objective or technical in nature and are easily
verifiable, thereby lending themselves to the use of expedited
proceedings. The Exchange further believes that violations of the ITS
rules may require sanctions more severe than a warning or cautionary
letter, but that full disciplinary proceedings (pursuant to Rule 10.3)
would, in general, be unsuitable because they would be costly and time
consuming in view of the minor nature of the violations. Nevertheless,
the Exchange notes that if a violation of an ITS rule is particularly
egregious or if the individual situation warrants such action, the
Exchange may proceed with formal disciplinary action pursuant to Rule
10.3, rather than with the MRP procedures under Rule 10.13. The
Exchange further notes that the Commission has recommended that the
Exchange add ITS violations to the PSE Minor Rule Plan.\4\ Finally, the
Exchange notes that the addition of the ITS rules to the MRP would be
consistent with the rules of the New York Stock Exchange.\5\
\4\ See Inspection Report on the Operation of the Intermarket
Trading System 3 (Nov. 18, 1994).
\5\ See NYSE Rule 476A (Supplementary Material).
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act, in general, and Sections 6(b)(5) and 6(b)(6), in particular, in
that it is designed to promote just and equitable principles of trade,
to protect investors and the public interest, and to provide that
members of the Exchange are appropriately disciplined for violations of
Exchange rules.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any inappropriate burden on competition.
[[Page 36851]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or 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 other 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. Sec. 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 Exchange. All
submissions should refer to File No. SR-PSE-95-16 and should be
submitted by August 8, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-17581 Filed 7-17-95; 8:45 am]
BILLING CODE 8010-01-M