[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Notices]
[Pages 34916-34918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16924]
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[[Page 34917]]
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-37365; File No. SR-PSE-96-17]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Stock Exchange, Inc. Relating to Joint Accounts
June 25, 1996.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on June 11, 1996, 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.
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\1\ 15 U.S.C. 78s(b)(1) (1988).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PSE proposes to amend its rules to eliminate a provision that
prohibits members who are registered to trade for the same joint
account from having overlapping primary appointment zones on the
Options Floor.
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
PSE Rule 6.35 currently provides that each market maker shall be
assigned a Primary Appointment Zone comprising a minimum of one trading
post up to a maximum of six contiguous trading posts.\2\ Under
Commentary .03 to PSE Rule 6.35, at least 75% of the trading activity
of a market maker (measured in terms of contract volume per quarter)
shall be in classes of option contracts to which his or her primary
appointment extends.\3\
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\2\ Previously, market makers were restricted to Primary
Appointment Zones comprising one trading post or two contiguous
trading posts. See Securities Exchange Act Release No. 36370
(October 13, 1995), 60 FR 54273 (approving increase from two to six
in the maximum number of trading posts that may be included in each
market maker's Primary Appointment Zone).
\3\ PSE Rule 6.35, Commentary .03 provides an exception for
unusual circumstances.
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With regard to joint accounts, PSE Rule 6.84, Commentary .05
currently provides that the primary appointment of a market maker may
not include trading posts which constitute the primary appointment of
any market maker with whom he or she has a joint account. The rule
further provides that, for the purposes of evaluating market maker
performance in accordance with PSE Rule 6.37, Commentary .04, contract
volume in the joint account will be assigned to the participants who
effected the transactions for the joint account, under the same
guidelines as if they effected the transactions for their own account.
The Exchange proposes to eliminate the provision in Commentary .05
to Rule 6.84 that prohibits joint account participants from having
overlapping primary appointment zones. The Exchange believes that this
rule places an unnecessary burden on member firms with joint accounts
that may desire to have overlapping primary zones for their market
makers in order to allow for continuous coverage when participant
market makers are temporarily absent from the floor due to illness or
vacation. The Exchange also believes that the current procedure of
requiring substitute market makers to seek an exemption from Rule 6.35
(or alternatively to assure that the volume of their trading outside
their primary zone does not exceed 25% of their total volume), is not
efficient. Moreover, the Exchange believes that Rule 6.40, Financial
Arrangements of Market Makers, which prohibits participants in the same
joint account from trading in the same trading crowd at the same time,
will address any concerns that joint account participants may attempt
to dominate unfairly the market in a particular option issue or option
series.\4\
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\4\ See also File No. SR-PSE-96-12 (proposal to amend Rule
6.40).
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Finally, the Exchange proposes, for purposes of greater clarity, to
eliminate the cross-reference to Rule 6.37, Commentary .04 that is
contained in Rule 6.84, Commentary .05 and to replace it with a cross
reference to Rule 6.35, Commentary .03.
The Exchange believes that the 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 facilitate transactions in securities, to remove
impediments to a free and open market, and to promote just and
equitable principles of trade.
(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, N.W., 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 in the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 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
[[Page 34918]]
refer to File No. SR-PSE-96-17 and should be submitted by July 24,
1996.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-16924 Filed 7-2-96; 8:45 am]
BILLING CODE 8010-01-M