[Federal Register Volume 62, Number 125 (Monday, June 30, 1997)]
[Notices]
[Pages 35244-35245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17006]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38766; File No. SR-PCX-97-24]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval to Proposed Rule Change and Amendment No. 
1 Thereto by the Pacific Exchange, Inc. Relating to the Change of 
Closing Time for Auction Market Trading on Its Equity Floors

June 24, 1997.
    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 June 12, 1997, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in Items I and II below, 
which Items have been prepared by the self-regulatory organization. On 
June 16, 1997, the PCX submitted Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice to solicit comments 
on the proposed rule change fro interested persons and to grant 
accelerated approval to the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Michael D. Pierson, Senior Attorney, 
Regulatory Policy, PCX, to Ivette Lopez, Assistant Director, 
Division of Market Regulation, SEC, dated June 13, 1997 (``Amendment 
No. 1''). In Amendment No. 1, the PCX clarified that its Crossing 
Session will be operated between 1:30 p.m. and 2:00 p.m. Pacific 
Time (``PT''), rather than from 1:50 p.m. to 2:00 p.m. (PT), as set 
forth in the original filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX is proposing to change its closing time for auction market 
trading on its Equity Floors \4\ to 1:30 p.m. (PT). The text of the 
proposed rule change is available at the Office of the Secretary, PCX, 
and at the Commission.
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    \4\ The Exchange operates equity trading floors in both San 
Francisco and Los Angeles.
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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 
propose 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
    The Exchange's auction market trading session currently closes at 
1:50 p.m. (PT).\5\ In addition, after the auction market closes, the 
Exchange operates a Crossing Session between 1:50 p.m. and 2:00 p.m. 
(PT), which occurs concurrently with Crossing Session I of the New York 
Stock Exchange (``NYSE'').\6\
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    \5\ See Securities Exchange Act Release No. 29631 (August 30, 
1991), 56 FR 46025 (September 9, 1991 (order approving change in 
close of auction market trading session on the Equity Floors from 
1:30 p.m. to 1:50 p.m. (PT) (File No. SR-PSE-91-21).
    \6\ See Securities Exchange Act Release No. 29305 (June 13, 
1991), 56 FR 29208 (order granting partial approval to File No. SR-
PSE-91-21).
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    The Exchange is now proposing to change the closing time for 
auction market trading on its Equity Floors to 1:30 p.m. (PT). The 
Exchange will continue to operate its Crossing Session between 1:30 
p.m. and 2:00 p.m. (PT) during which time certain designated orders 
will continue to be eligible for primary market price protection.\7\ 
The Exchange is proposing to reduce its auction market trading hours 
because the light trading volume that currently occurs between 1:30 
p.m. and 1:50 p.m. (PT) does not justify the operating expenses to the 
Exchange and its Members during that time period. In this regard, the 
Exchange does not believe that the change will have a

[[Page 35245]]

negative impact on the ability of investors to access the Exchange's 
markets.
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    \7\ Amendment No. 1 modified the original filing to reflect that 
PCX's Crossing Session will operate between 1:30 p.m. and 2:00 p.m. 
(PT) under the proposal, rather than from 1:50 p.m. to 2:00 p.m. 
(PT), as described in the original filing. See Amendment No. 1, 
supra note 3.
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    The Exchange is proposing to add a new Commentary .02 to Rule 4.2 
to codify the new closing time. In addition, the Exchange is proposing 
to modify Rule 5.25(f)(ii), which currently provides, in part, that 
from 1:00 p.m. to 1:50 p.m. (PT), P/COAST \8\ will act as a routing 
system and will accept certain designated types of orders. 
Specifically, the Exchange proposes to change the references to 
``1:50'' to ``1:30.''
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    \8\ Pacific Computerized Order Access Securities System. See 
Securities Exchange Act Release No. 38609 (May 12, 1997), 62 FR 
27096 (May 16, 1997).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and Section 6(b)(5),\10\ 
in particular, is that it is designed to promote just and equitable 
principles of trade.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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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. 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 Room, 450 Fifth Street, N.W., Washington, 
D.C. 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of the PCX. All submissions should 
refer to File No. SR-PCX-97-24 and should be submitted by July 21, 
1997.

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

    The Commission has reviewed carefully the PCX's proposed rule 
change, as amended, and believes, for the reasons set forth below, the 
proposal is consistent with the requirements of Section 6 of the 
Act,\11\ and the rules and regulations thereunder applicable to a 
national securities exchange.\12\ Specifically, the Commission believes 
the proposal is consistent with Section 6(b)(5) of the Act \13\ because 
it is reasonably designed to promote just and equitable principles of 
trade.
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    \11\ 15 U.S.C. 78f.
    \12\ In approving this rule, the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).
    \13\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that, absent any regulatory concerns, the 
decision to change the Exchange's trading hours is a matter that falls 
within the business discretion of the PCX. The Commission notes that 
the Exchange requested approval to extend its trading hours from 1:30 
p.m. to 1:50 p.m. in 1991.\14\ At that time, the Exchange cited the 
need for a competitive response to the actions of the NYSE as the 
rationale underlying its decision to expand its trading hours.\15\ In 
its Order approving the trading hour extension, the Commission stated 
that it believed that an extension of the auction market trading hours 
by 20 minutes would ``not affect the [PCX's] ability to provide fair 
and orderly markets or provide for the efficient execution of customer 
orders.''\16\ Similarly, the Commission does not believe that reducing 
the trading hours by 20 minutes will have an adverse affect on the 
auction market or public customer orders. Moreover, as the volume of 
trading occurring during that 20 minute time period clearly has failed 
to meet the PCX's expectations, the Commission believes that it is 
reasonable for PCX to conclude that it is appropriate to curtail equity 
trading at 1:30 p.m. (PT). Accordingly, the Commission believes that 
the proposed changes will facilitate the operation of PCX's Equity 
Floor and, therefore, the proposed rule change is consistent with 
Section 6 of the Act.\17\
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    \14\ See supra note 5.
    \15\ Id.
    \16\ Id.
    \17\ 15 U.S.C. 78f.
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register. The Commission notes that the 
PCX plans to shorten its equity trading hours to 1:30 p.m. (PT) 
effective June 26, 1997. The Commission also notes that the Exchange's 
members and the public were provided with advance notice of the 
proposed change in the form of a Regulatory Bulletin issued by the PCX 
on June 13, 1997. Finally, the Commission notes that the Exchange 
desires to shorten its trading hours as it is not cost effective for 
the Equity Floor to operate during that 20 minute time period. The 
Commission believes that the cost savings that are expected to accrue 
to the PCX from the shortened trading hours warrant approval of the 
proposal on an accelerated basis so that the Exchange may benefit from 
the anticipated cost savings as soon as possible. Therefore, the 
Commission believes that granting accelerated approval of the proposed 
rule change, as amended, is appropriate and consistent with Section 6 
of the Act.\18\
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    \18\ 15 U.S.C. 78f.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\19\ that the proposed rule change (SR-PCX-97-24), including 
Amendment No. 1, is hereby approved on an accelerated basis.
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    \19\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17006 Filed 6-27-97; 8:45 am]
BILLING CODE 8010-01-M