[Federal Register Volume 63, Number 67 (Wednesday, April 8, 1998)]
[Notices]
[Pages 17252-17253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9130]



[[Page 17252]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39818; File No. SR-PCX-98-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc., Relating to the Treatment of PMP 
Orders Generated Through the Matching of Profiles by the PCX 
Application of the OptiMark System

March 30, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on March 2, 1998, the Pacific Exchange (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') 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. Sec. 78s(b)(1) (1982).
    \2\ 17 CFR 240.19b-4 (1991).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    PCX is filing a proposed rule change to amend its interpretation of 
Rule 5.32(a) ``PMP-Only'' of its Rules of Board of Governors so that it 
will clarify how PMP orders will be treated when generated from the 
matching of Profiles through the PCX Application of the OptiMark System 
(``PCX Application'').\3\ A new commentary has been added to Rule 
5.32(a) and is attached as Exhibit A.
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    \3\ For a description of the PCX Application of the OptiMark 
System, see Securities Exchange Act Release No. 39086 (Sept. 17, 
1997), 62 FR 50036 (Sept. 24, 1997) (Commission order granting 
approval for the PCX Application).
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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 
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

    PCX will modify the interpretation of its Rule 5.32(a) so that 
executions resulting from the operation of the PCX Application would be 
considered as a part of the ``primary market'' for the purposes of 
execution of orders marked ``PMP.'' The purpose of the proposed 
interpretation of the rule is to respond to the SEC staff's request to 
clarify the Rule 5.32(a) ``PMP Only.'' Through the addition of proposed 
Commentary .01, Rule 5.32(a) would be interpreted as meaning that 
during regular ``primary'' market trading hours, an order specifically 
marked ``PMP'' would receive primary market protection, which would 
include not only the traditional primary markets (e.g., New York 
markets) but also matches resulting from the PCX Application. 
Accordingly, executions resulting from the PCX Application may trigger 
the execution of an order marked ``PMP Only,'' even if the markets in 
New York have not traded at that price. Similarly, a PMP order 
reflectedinto the PCX Application as a Profile, which is matched in the 
PCX Application and results in an execution, would require that such 
PMP limit order be filled, even if the price is out of range from an 
otherwise existing ``primary'' market, however defined. This would then 
be consistent with the overall premise that under no circumstance can a 
specialist accept an execution arising out of orders generated from a 
cycle of the PCX Application, without also executing any eligible 
booked orders that were put in the book before the cycle began.
    The proposed rule change interpretation is consistent with the 
provisions of Section 6(b)(5) of the Exchange Act in that the PCX 
Application is a facility that is designed to promote just and 
equitable principles of trade and to protect investors and the public 
interest, and is not designed to permit unfair discrimination between 
customers, issuers, brokers or dealers. In addition, the PCX believes 
that the proposed rule change is consistent with provisions of Section 
11A(a)(1)(B) of the Exchange Act, which states that new data processing 
and communications techniques create the opportunity for more efficient 
and effective market operations.

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. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date 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 such 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, including whether the proposed rule 
change is consistent with the Act. 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 in 
the Commission's Public Reference Room, 450 Fifth Street, N.W., 
Washington, DC 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-98-12 and should be 
submitted by April 29, 1998.

    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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[[Page 17253]]

Jonathan G. Katz,
Secretary.

Exhibit A--Additions are in italics Text of Rule 5.32(a) PMP Round 
Lots

para. 4279
PMP-Only
    Unless otherwise designated all round lot orders in PMP stocks will 
be executed against primary market prices only and such orders will not 
be effective when the primary market is closed.
    Commentary .01. During regular ``primary'' market trading hours, an 
order specifically marked ``PMP'' shall receive primary market 
protection based on the first applicable transactions in the 
traditional primary markets (e.g., New York Stock Exchange and American 
Stock Exchange) or matches resulting from the PCX Application of the 
OptiMark System.

[FR Doc. 98-9130 Filed 4-7-98; 8:45 am]
BILLING CODE 8010-01-M