[Federal Register Volume 61, Number 245 (Thursday, December 19, 1996)]
[Notices]
[Pages 67088-67090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32234]


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SECURITIES AND EXCHANGE COMMISSION
(Release No. 34-38045; File No. SR-PSE-96-44)


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

December 13, 1996.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 15, 1996, the Pacific Stock Exchange Incorporated 
(``PSE'' or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change, and on December 
3, 1996 filed Amendment No. 1\3\ to the proposed rule change as 
described in Items I and II 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. Sec. 78s(b)(1).
    \2\17 CFR 240.19b-4.
    \3\See Letter from Rosemary A. MacGuinness, Senior Counsel, PSE 
to Katherine A. England, Assistant Director, Division of Market 
Regulation, SEC, dated, December 3, 1966 (``Amendment No. 1). 
Amendment No. 1 withdraws the filing except for the section amending 
Article VI, Application and Election to Membership, Sections 2, 3, 
and 4.
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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 Article VI, Sections 2, 3, and 4 of its 
Constitution.

[[Page 67089]]

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
    This rule filing is being submitted in order to ensure that the 
constitutional provisions relating to members of the Exchange are in 
conformity with the recent changes made to Rule 1, Membership, of the 
PSE Rules. PSE Rule 1 was reorganized and amended so that its 
provisions would more accurately and logically reflect the Exchange's 
requirements and procedures.\4\ The following is a description of the 
specific changes.
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    \4\See Securities Exchange Act Release No. 37736 (Sept. 26, 
1996), 61 FR 51734 (Oct. 3, 1996) (approving File No. SR-PSE-96-07).
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Article VI--Application and Election to Membership
    Sec. 2. Application for Membership and Election. The language in 
this section pertaining to posting of applicant members has been 
deleted. The Exchange's current posting procedures are now contained in 
PSE Rule 1.6(b). Section 2 currently provides that an applicant's name 
shall be posted with all Exchange members upon approval. However, PSE 
Rule 1.6(b) accurately reflects the Exchange's procedures by providing 
that, within a reasonable period of time following receipt of an 
applicant's application for membership, the applicant's name shall be 
distributed to all members and shall be posted on the bulletin boards 
of the Exchange for ten (10) days. Thus, the Exchange's procedure is to 
post and distribute the applicant's name prior to approval and not upon 
approval.
    Sec. 3. Effective Date. Section 3 has been entirely deleted. PSE 
Rule 1.6 now addresses the procedures for application for membership.
    Sec. 4. Sign Constitution. Section 4, which is renumbered Section 3 
as a result of the deletion of the existing Section 3, is amended to 
reflect that members pledge to abide by the PSE Constitution and the 
Rules of the Exchange by signing the Membership Application; they do 
not actually sign the Constitution.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement of Section 6(b)(5) that an exchange have rules that are 
designed to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.\5\
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    \5\ 15 U.S.C. Sec. 78f(b)(5).
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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 comments received with respect to the proposed rule change 
addressed aspects of the filing that were withdrawn by Amendment No. 1.

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, 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. Sec. 552, will be available for inspection and copying at 
the Commission's Public Reference Room. 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-96-44 and 
should be submitted by January 9, 1997.

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

    The Commission finds that the PSE's proposed rule change Amending 
Article VI, Sections 2, 3, and 4 of its Constitution is consistent with 
the requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and, in particular, with 
the requirements of Section 6(b) of the Act.\6\ Specifically, the 
Commission believes that the proposal is consistent with the Section 
6(b)(5) \7\ requirements that the rules of an exchange be designed to 
promote just and equitable principles of trade, to prevent fraudulent 
and manipulative acts and, in general, to protect investors and the 
public interest. In addition, the Commission believes that the proposal 
is consistent with the Section 6(b)(7) \8\ requirements that the rules 
of an exchange provide for a fair procedure for the denial of 
membership to any person seeking membership therein. For the reasons 
set forth below, the Commission believes that the PSE's proposal 
furthers the objectives of Section 6(b)(5) of the Act.
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    \6\ 15 U.S.C. Sec. 78f(b).
    \7\ 15 U.S.C. Sec. 78f(b)(5).
    \8\ 15 U.S.C. Sec. 78f(b)(7).
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    On September 26, 1996, the Commission approved a reorganization and 
revision of the Exchange's rules regarding the membership process.\9\ 
At that time, it was recognized by both the Commission and the Exchange 
that some of the new rules would be in conflict with Article VI of the 
PSE's Constitution.
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    \9\ See Exchange Act Release No. 37736 supra note 4.
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    Specifically, revised PSE Rule 1.8(a) conflicts with Article VI, 
Section 3 of the PSE Constitution. PSE Rule 1.8(a) states that approved 
applications must be activated by the applicant within six months, 
while the PSE Constitution provides that admission to membership 
automatically becomes effective after an approved application has been 
posted for 10 days. In addition, revised PSE Rule 1.6(b) conflicts with 
Article VI, Section 2, of the PSE Constitution. PSE Rule 1.6(b) 
requires the name of all applicants to be posted within a reasonable 
time after receipt and before being approved. This rule is in direct 
conflict with the PSE Constitution which requires that the name of the 
applicant be posted after it has been approved.
    It was anticipated when PSE Rule 1 was amended that the Exchange 
would submit a filing to rectify these conflicts.\10\
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    \10\ Id. at notes 23-24.
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    The Commission finds good cause to approve the proposed rule 
change, as amended, prior to the thirtieth day after the date of 
publication of notice thereof

[[Page 67090]]

in the Federal Register. All of the changes contained in the filing are 
to rectify conflicts between the PSE Constitution and rules, or 
otherwise do not raise any significant regulatory concerns. Therefore, 
the Commission believes that granting accelerated approval to the 
proposed rule change, as amended, is appropriate and consistent with 
Section 6 and Section 19(b)(2) of the Act.\11\
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    \11\ 15 U.S.C. 78f and 78s(b)(2).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change SR-PSE-96-44, as amended is 
approved.

    \12\ 15 U.S.C. Sec. 78s(b)(2) (1988).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 96-32234 Filed 12-18-96; 8:45 am]
BILLING CODE 8010-01-M