[Federal Register Volume 60, Number 195 (Tuesday, October 10, 1995)]
[Notices]
[Pages 52717-52718]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25021]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36325; File No. SR-PSE-95-23]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Pacific 
Stock Exchange Incorporated Relating to Corporate Governance

October 2, 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 
September 28, 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. On October 2, 1995, the Exchange submitted 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 Rosemary A. MacGuinness, Senior Counsel, 
PSE, to Glen Barrentine, Senior Counsel, SEC, dated October 2, 1995. 
In Amendment No. 1, the Exchange requests that the proposed rule 
change be considered under Section 19(b)(2), rather than Section 
19(b)(3)(A) as originally filed, and approved on an accelerated 
basis.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange pursuant to Rule 19b-4 of the Act submits this rule 
filing to amend Article II, Section 1(a), and Article III, Section 2(a) 
of the Constitution of the PSE, to provide for an additional public 
Governor on the Board of Governors. The text of the proposed rule 
change is available at the PSE and 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 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 III 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
    Currently, Article II of the Constitution of the PSE provides for 
eighteen (18) elected Governors, of whom five (5) are representatives 
of the public. The proposed rule change will provide for one additional 
public Governor, and will thereby increase the total number of elected 
Governors to nineteen (19).
    When the Commission's Chairman, Arthur Levitt, met with the PSE 
Board of Governors (``Board'') at its December 14, 1994 meeting, he 
discussed the important role boards play at the securities exchanges in 
promoting the investing public's confidence in the integrity of U.S. 
securities markets. At its meeting on January 26, 1995, the Governors 
discussed Chairman Levitt's observation about the composition of the 
PSE Board and were in agreement with Chairman Levitt that public, non-
industry representatives on exchange boards convey a message to public 
investors that their interests will be protected, as well as bring 
additional business expertise to the Exchange in areas other than 
securities. The Board also considered the major contributions of the 
five (5) current public Governors and their increased time commitments 
to Exchange matters (e.g., technology, finance and banking). Therefore, 
the Board unanimously approved the addition of a public Governor, 
increasing the number of public representatives from five to six.

2. Statutory Basis

    The proposed rule filing is consistent with Section 6(b)(3) and 
Section 6(b)(5) of the Act, in that it will assure a fair 
representation of the members in the selection of its Governors and 
administration of its affairs, and is designed to promote just and 
equitable principles of trade, to protect investors and the public 
interest.

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

    The proposed rule change will impose no burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    The amendments were approved by the PSE Membership in accordance 
with Article XVII of the PSE Constitution.

III. 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, N.W., 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 

[[Page 52718]]
Section, 450 Fifth Street, N.W., 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-95-23 and should be submitted by October 31, 1995.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission has reviewed carefully PSE's proposed rule change 
and concludes that it is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange, and in particular, with Sections 6(b)(3) and 
6(b)(5) of the Act. Section 6(b)(3) of the Act requires that the rules 
of an exchange assure a fair representation of its members in the 
selection of its directors and administration of its affairs and that 
one or more directors represent issuers and investors and not be 
associated with a member of the exchange or a broker-dealer. Moreover, 
Section 6(b)(5) of the Act requires, among other things, that the rules 
of an exchange be designed, in general, to protect investors and the 
public interest.
    The proposed rule change would alter the size and composition of 
the PSE's Board of Governors by providing for one additional public 
governor on the Board. Historically, the Commission has encouraged the 
exchanges to give credence to their quasi-public nature by fostering 
public representation on their governing boards.\2\ Specifically, the 
Commission has noted previously that adding public directors to the 
boards of the exchanges may help ensure adequate public representation. 
The Commission continues to encourage self-regulatory organizations to 
include adequate public representation on their governing boards to 
protect the public interest.

    \2\ See SEC Report of Special Study of Securities Markets, 88th 
Cong., 1st Sess. (Comm. Print 1963), pt. 4 at 763-65.
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    The Commission finds good cause for approving the proposed rule 
change, including Amendment No. 1, prior to the thirtieth day after the 
date of publication of the notice of filing thereof. The PSE proposal 
is designed to achieve greater public representation on the Exchange's 
governing body that in turn will protect investors and the public 
interest. Accelerated approval thereof will allow these benefits to be 
realized as soon as possible.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\3\ that the proposed rule change (SR-PSE-95-23) is approved.

    \3\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\

    \4\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-25021 Filed 10-6-95; 8:45 am]
BILLING CODE 8010-01-M