[Federal Register Volume 62, Number 164 (Monday, August 25, 1997)]
[Notices]
[Pages 44999-45000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22427]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38945; File No. SR-PCX-97-27]


Order Approving Proposed Rule Change

August 18, 1997.
    Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to The Addition of a 
Public Governor to its Board of Governors and Permitting an 
Additional Public Governor to Serve on the Executive Committee.

    On June 27, 1997, the Pacific Exchange (``PCX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') a proposed rule change pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ to add a public governor to its Board of Governors and 
to permit an additional public governor to serve on the Executive 
Committee of the Exchange. The Commission published notice of the 
proposed rule change in the Federal Register on July 16, 1997.\3\ This 
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 38821 (July 8, 1997), 62 
FR 38180.
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I. Description of the Proposal

    PCX is amending Sections 1(a) and 6 of Article II and Section 2(a) 
of Article III of its Constitution so that an additional individual 
from the public sector may serve on the Board of Governors and to 
permit an additional public governor to serve on the Executive 
Committee for the Exchange. This proposed rule change will result in 
the PCX Board having seven public governors on its twenty-two person 
Board. Also, the Executive Committee, comprised of six governors, will 
now have two public governors versus the current single public 
governor. In addition, the proposed rule change contains an alteration 
to the text of Section 2(a), establishing gender neutral language for 
that provision.

II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder

[[Page 45000]]

applicable to a national securities exchange, and in particular, the 
requirements of Sections 6(b)(5) in that it is designed to prevent 
fraudulent, manipulative acts and practices and to promote just and 
equitable principles of trade, and to remove impediments to and protect 
the mechanism of a free and open market and to protect investors and 
the public interest.\4\
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    \4\ 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).
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    The Commission believes that another public governor on the 
Exchange Board will render the Board more balanced, fair and effective. 
Similarly, adding another public governor to serve on the Executive 
Committee will serve to increase the influence of outside directors 
regarding the administration of the Exchange.
    While the Commission views the addition of a public member to the 
Exchange's Board of Governors as an encouraging initial step towards a 
more balanced Board composition, the Commission continues to encourage 
the Exchange to consider adding more public members to its Board in 
order to achieve a public majority on the Board. The Commission 
believes that significant representation by public governors on the 
Board is desirable and should ensure better protection of investors and 
the public interest. Public governors are likely to have little or no 
stake in internal Exchange politics, and, if carefully selected, public 
governors should bring diverse experience and increased ethical 
sensitivity to the Board, thus enhancing the confidence of members and 
of the public in the Exchange's ability to govern its members 
appropriately.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\5\ that the proposed rule change (SR-PCX-97-27) is approved.

    \5\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-22427 Filed 8-22-97; 8:45 am]
BILLING CODE 8010-01-M