[Federal Register Volume 62, Number 132 (Thursday, July 10, 1997)]
[Notices]
[Pages 37108-37109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18091]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38813; File No. SR-PCX-97-13]


Self-Regulatory Organizations; Pacific Exchange; Order Approving 
Proposed Rule Change Relating to the Use of the Internet for Providing 
Market Quotations or Advertising to the General Public and Notice of 
Filing and Order Granting Accelerated Approval of Amendment Thereto

July 3, 1997.

I. Introduction

    On April 23, 1997, the Pacific Exchange, Inc., (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to the use of the 
internet for providing market quotations or advertising to the general 
public. The proposed rule change was published for comment in 
Securities Exchange Act Release No. 38620 (May 13, 1997), 62 FR 27641 
(May 20, 1997). The Commission received no comments on the proposal. On 
June 26, 1997, the Exchange amended the proposed rule change 
(``Amendment No. 1'') to narrow its scope to market quotations or 
advertising appearing only on the internet.\3\ This order approves the 
proposed rule change and grants accelerated approval to Amendment No. 
1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Letter from Michael D. Pierson, Senior Attorney, Regulatory 
Policy, PCX, to Margaret J. Blake, Division of Market Regulation, 
Commission (June 26, 1997). As originally filed, the proposed rule 
change applied to market quotations or advertising appearing on the 
internet or ``similar electronic networks.'' Amendment No. 1 removed 
all references to ``similar electronic networks.''
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange is proposing to add three provisions to the text of 
Rule 9.24, ``Radio, Television, Telephone Reports.'' \4\ The first 
provision provides that Members and Member Organizations desiring to 
make use of the internet for the purpose of providing market quotations 
or advertising to the general public, must first obtain the consent of 
the Exchange by submitting an outline of the program to the Exchange.
---------------------------------------------------------------------------

    \4\ Rule 9.24 currently provides that Member firms desiring to 
broadcast Exchange quotations on radio or television programs, or in 
public telephone market reports, or to make use of radio or 
television broadcasts for any business purpose, shall first obtain 
the consent of the Exchange by submitting an outline of the program. 
The rule further provides that the text of all commercials and 
program material (except lists of market quotations) about 
securities or investing sponsored by member firms on radio, 
television, or public telephone market reports, or program material 
supplied to these media shall be sent to the Exchange promptly 
following the program in which it is used.
---------------------------------------------------------------------------

    The second provision provides that the text of all commercials and 
program material (except lists of market quotations) about securities 
or investing sponsored by Member or Member Organizations on the 
internet, or program material supplied to such media, must be sent to 
the Exchange promptly following the program in which it is used.
    Finally, the Exchange is proposing to clarify the limited scope of 
Rule 9.24 by stating expressly that it only applies to Members and 
Member Organizations for which the Exchange is the designated examining 
authority (``DEA'').
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act, and Section 6(b)(5) of the Act \5\ in particular, in 
that it promotes just and equitable principles of trade and protects 
investors and the public interest.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. Sec. 78f(b)(5).
---------------------------------------------------------------------------

III. Discussion

    The Commission believes PCX's proposed rule change is consistent 
with Section 6(b)(5) of the Act.\6\ Section 6(b)(5) requires, among 
other things, that the rules of an exchange be designed to promote just 
and equitable principles of trade, and, in general, to further investor 
protection and the public interest.\7\
---------------------------------------------------------------------------

    \6\ 15 U.S.C. Sec. 78f (b) (5).
    \7\ 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. Sec. 78c(f).
---------------------------------------------------------------------------

    PCX proposes requiring Members and Member Organizations to obtain 
the consent of the Exchange prior to making use of the internet for 
providing market quotations or advertising to the general public. The 
Commission believes that Exchange review of market quotations or 
advertising intended for the general public is necessary for investor 
protection and overall public interest. The Commission believes that 
Exchange review of market quotations or advertising appearing on the 
internet will ensure the accuracy of such information and result in a 
higher level of investor protection. Similarly, the Commission believes 
that the text of commercials and program material about securities or 
investing sponsored by Members or Member Organizations on the internet 
should be sent to the Exchange promptly following the

[[Page 37109]]

program in which it is used. The Commission believes that this is 
appropriate as it will give the Exchange an opportunity to review and 
analyze the program material as it appeared on the internet, to assure 
the accuracy of the information, thereby resulting in continued 
investor protection and overall public interest.
    Finally, the Commission believes that amending Rule 9.24 to state 
expressly that it only applies to Members and Member Organizations for 
which the Exchange is the DEA is appropriate, as it will clarify the 
scope of the rule and its application only to Members and Member 
Organizations.
    The Commission finds good cause to approve Amendment No. 1 to the 
filing prior to the 30th day after the date of publication of the 
notice of filing because the Amendment does not affect the substantive 
rights of Members and accelerated approval will facilitate the 
uninterrupted implementation of the proposed rule change.

IV. Solicitation of Comments

     Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 1. Persons making written submission 
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 changes that are filed 
with the Commission, and all written communications relating to the 
proposed rule changes 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 5th Street, 
N.W., Washington, D.C. 20549. Copies of such filings will also be 
available at the principal office of the Exchange. All submissions 
should refer to File No. SR-PCX-97-13 and should be submitted by July 
3, 1997, in the Federal Register.

V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change and Amendment No. 1 are consistent with the Act and the 
rules and regulations thereunder applicable to the PCX, and in 
particular Section 6(b)(5).
    It is therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-PCX-97-13) be and 
hereby is approved, and that Amendment No. 1 filed thereto be and 
hereby is approved on an accelerated basis.

    \8\ 15 U.S.C. 78s (b) (2).
---------------------------------------------------------------------------

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a) (12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-18091 Filed 7-9-97; 8:45 am]
BILLING CODE 8010-01-M