[Federal Register Volume 62, Number 30 (Thursday, February 13, 1997)]
[Notices]
[Pages 6825-6826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3624]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38253; File No. SR-PSE-97-01]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Stock Exchange Incorporated Relating to the
Limitation of Liability in Connection With Indexes on Which Options Are
Listed or Traded on the Exchange
February 6, 1997.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 13, 1997, 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).
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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 modify PSE Rule 7.13, which relates to
the limitation of liability of the PSE in connection with indexes on
which options are listed or traded on the Exchange. The text of the
proposed rule change is available at the Exchange and at 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 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
PSE Rule 7.13 currently provides that the Exchange shall have no
liability for damages, claims, losses or expenses caused by any errors,
omissions or delays in calculating or disseminating the index value.
The Exchange now proposes to expand this provision in several respects.
First, the Exchange proposes to adopt new subsection (a), which will
provide that neither the Exchange, any affiliate, nor any Index
Licensor or Administrator shall have any liability for any loss,
damages, claim, or expense arising from or occasioned by any
inaccuracy, error, or delay in, or omission of or from, (i) any index
and basket information or (ii) the collection, calculation,
compilation, maintenance, reporting or dissemination of any index or
any index and basket information, resulting either from any negligent
act or omission by the Exchange, any affiliate or any Index Licensor or
Administrator or from any act, condition or cause beyond the reasonable
control of the Exchange, any affiliate or any Index Licensor or
Administrator, including, but not limited to, flood, extraordinary
weather conditions; earthquake or other act of God, fire, war,
insurrection, riot, labor dispute, accident, action of government,
communications or power failure, or equipment or software malfunction.
The Exchange also proposes to adopt new subsection (b), which
states that neither the Exchange, any affiliate, nor any Index Licensor
or Administrator makes any express or implied warranty as to results
that any person or party may obtain from using (i) any basket, (ii) the
index that is the basis for determining a basket's component
[[Page 6826]]
stocks, or (iii) any index and basket information, for trading or any
other purpose. It further states that the Exchange, its affiliates,
Index Licensors, and Administrators make no express or implied
warranties and disclaim all warranties of merchantability or fitness
for a particular purpose or use, with respect to any such basket,
index, or information.
The Exchange also proposes to adopt new Commentary .01 to PSE Rule
7.13. This Commentary would provide that, for the purposes of PSE Rule
7.13, ``Index Licensor or (and) Administrator'' includes any person
who: (a) licenses to the Exchange the right to use (i) an index that is
the basis for determining the inclusion and relative representation of
a basket's component stocks or (ii) any trademark or service mark
associated with such an index; (b) collects, calculates, compiles,
reports and/or maintains such an index, or index and basket information
relating to such an index; (c) provides facilities for the
dissemination of index and basket information; and/or (d) is
responsible for any of the activities described above.
In addition, the Exchange proposes to adopt new Commentary .02 to
PSE Rule 7.13, which would provide that, for the purposes of PSE Rule
7.13, ``index and basket information'' includes (a) information
relating to the inclusion and relative representation of stocks in an
index from which a basket is derived, such an index's values, a
basket's component stocks, the weighted summation of the bids or offers
of a basket's component stocks, and basket and component stock last
sale and quotation information and (b) other information relating to a
basket or its index.
The purpose of the rule change proposal is to clarify existing PSE
Rule 7.13 and to expand it with regard to potential Exchange liability
and with regard to Index Licensors and Administrators. The Exchange
notes that the text of proposed PSE Rule 7.13 and Commentaries .01 and
.02 is substantially similar to New York Stock Exchange Rule 813.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \2\ of the Act in general and furthers the objectives of
Section 6(b)(5) \3\ in particular in that it is designed to facilitate
transactions in securities and to promote just and equitable principles
of trade.
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\2\ 15 U.S.C. 78f(b).
\3\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
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
The Exchange has neither solicited nor received written comments.
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 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 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, 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 Section, 450 Fifth Street, N.W.,
Washington, D.C. 10549. Also, copies of such filing will be available
for inspection and copying at the principal office of the PSE. All
submissions should refer to File No. SR-PSE-97-01 and should be
submitted by March 6, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\4\
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\4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-3624 Filed 2-12-97; 8:45 am]
BILLING CODE 8010-01-M