[Federal Register Volume 63, Number 92 (Wednesday, May 13, 1998)]
[Notices]
[Pages 26662-26666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12702]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39970; File No. SR-PCX-97-28]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change and Notice of Filing and 
Order Granting Accelerated Approval to Amendment No. 2 to the Proposed 
Rule Change Relating to Exchange-Sponsored Hand-Held Terminals for 
Options Floor Brokers

May 7, 1998.

I. Introduction

    On July 3, 1997, and December 12, 1997, respectively, the Pacific 
Exchange, Inc. (``PCX'' or ``Exchange'') submitted to the Securities 
and Exchange Commission (``SEC'' or ``Commission''), 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 and Amendment No. 
1 thereto to adopt rules to allow the use of Exchange-Sponsored Floor 
Broker Hand-Held Terminals (``Exchange-Sponsored Terminals'') on the 
floor of the Exchange. The Exchange also proposed an interpretation to 
Rule 6.67 which would not require members' orders entered through 
Exchange-Sponsored Terminals to be in writing. Finally, the Exchange 
proposed Rule 6.88(b) to prohibit the use of a floor broker hand-held 
terminal for market making. On March 30, 1998, the Exchange filed 
Amendment No. 2 to the proposed rule change with the Commission.\3\ In 
Amendment No. 2, the Exchange amends Rule 6.67, Commentary .02 to 
indicate that orders sent through proprietary Terminals would also be 
deemed to be written orders for the purposes of Rule 6.67.
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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 David Sieradzki, Attorney, Division of 
Market Regulation (``Division''), SEC dated March 27, 1998 
(``Amendment No. 2'').
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    The proposed rule change, and Amendment No. 1 thereto were 
published for comment in the Federal Register on January 16, 1998.\4\ 
No comments were received on the proposal. This order approves the 
proposal as amended, including Amendment No. 2 on an accelerated basis.
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    \4\ Securities Exchange Act Release No. 39532 (Jan. 9, 1998), 63 
FR 2711 (Jan. 16, 1998).
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II. Description of the Proposal

A. General Description

    The Exchange's Member Firm Interface (``MFI'') \5\ currently 
permits Exchange Member Firms to use an electronic link with the 
Exchange to send their option orders directly to the Exchange for 
delivery to POETS (Pacific Option Exchange Trading System).\6\ Under 
the proposal, member firms

[[Page 26663]]

would be able to use the MFI connection to route orders directly to the 
member firm booth (not by default) or to a floor broker's Exchange-
Sponsored Terminal located in the trading crowd.\7\ The Commission 
notes that the PCX's proposal does not restrict the use of other Hand-
Held terminal systems provided that they do not interfere 
electronically with existing Exchange systems.\8\
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    \5\ The MFI is an electronic order delivery and reporting system 
that allows member firms to route orders for execution by the 
automatic execution feature of POETS as well as to route limit 
orders to the Options Public Limit Order Book. Orders that do not 
reach those two destinations are defaulted to a member firm booth. 
MFI also provides member firms with instant confirmation of 
transactions to their systems. Member firms may access POETS by 
establishing an MFI mainframe-to-mainframe connection.
    \6\ Orders entered via MFI are delivered to one of three 
destinations: (a) To Auto-Ex, where they are automatically executed 
at the disseminated bid or offering price; (b) to Auto-Book, which 
maintains non-marketable limit orders based on limit price and time 
of receipt; or (c) to a Member Firm's default destination--a 
particular firm booth or remote entry site--if the order fails to 
meet the eligibility criteria necessary for either Auto-Ex or Auto-
Book or if the Member Firm requests such default for its orders. See 
generally Exchange Act Release No. 27633 (Jan. 18, 1990), 55 FR 2466 
(Jan. 24 1990) (``POETS Approval Order'').
    \7\ In that regard, the Exchange is proposing to add a new Rule 
6.88(a), which provides: ``Members and Member Organizations may send 
orders electronically through the Exchange's Member Firm Interface 
and route them directly to POETS, to a Member Firm booth on the 
Options Floor, to a Floor Broker Hand-Held Terminal located on the 
Options Floor, or to any other location designated by the Exchange, 
provided that the Member or Member Organization has been approved by 
the Exchange to do so.''
    \8\ See note 16 infra and accompanying text.
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    Under the program, Member Firms will be permitted to send their 
orders electronically to the Exchange via MFI and route them to one of 
three destinations on the trading floor: (a) To a floor broker standing 
in the trading crowd; (b) to a Member Firm booth location on the 
trading floor; or (c) to POETS, where they will be automatically 
executed by Auto-Ex or maintained in Auto-Book. All orders so 
transmitted will first be sent through the PCX's system that stores and 
processes all data for the Exchange-Sponsored Terminals 
(``Server'').\9\ Orders sent to a Member Firm booth via the Server may 
be sent subsequently either to POETS or to a floor broker in the 
trading crowd. Orders sent via the Server to a floor broker in the 
trading crowd may subsequently be transmitted to a Member Firm booth, 
to POETS, or to another floor broker on the trading floor.
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    \9\ Accordingly, the Exchange stated that there will be no 
appreciable delay in order entry due to the transmission of orders 
through the Server. The Exchange also stated that if a Member Firm 
routes an order to POETS via MFI for automatic execution or 
maintenance in Auto-Book, the order will not be sent through the 
Server. Only orders to be transmitted through the Hand-Held Terminal 
system will be sent through the Server.
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    The Exchange intends to furnish Exchange-Sponsored Terminals to be 
used by floor brokers under the program. In addition, the Exchange will 
supply booth devices that will have the capability to retrieve and 
display all orders that were submitted through the device. The Exchange 
intends to assess users a monthly rental fee for such use after the 
implementation of the floor-wide program in Phase II.\10\
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    \10\ The Exchange will submit a separate rule filing to the 
Commission to establish these fees. See note 19 infra and 
accompanying text.
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    Exchange rules on order representation and order execution will be 
unchanged under the program.\11\ However, the Exchange is proposing to 
modify one of its rules on orders to provide that an order sent 
electronically through MFI will be deemed to be a ``written order'' for 
purposes of Rule 6.67. The order information that must be reported to 
the Exchange in connection with each transaction that is executed on 
the trading floor will be also unchanged under the program.\12\
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    \11\ See, e.g., PCX Rules 5.1(e), 6.43-6.48 and Options Floor 
Procedure Advices A-1--A-11 and G-1--G12.
    \12\ See PCX Rule 6.69.
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    Under the proposal, initially, floor brokers using Exchange-
Sponsored Terminals will not need to write up order tickets because the 
trade-related floor broker terminal information will be passed 
electronically to POETS and then to POPS (Pacific Options Processing 
Information) for clearing purposes. Yet the party on the other side of 
the trade, if it is executed by a market maker or a floor broker not 
using a terminal, will have to submit a paper order ticket to the 
Exchange for processing. Later, when advancements in technology allow 
for it, no paper tickets will be required because all market makers and 
floor brokers will be able to interface with each other through 
Exchange-Sponsored Terminals.\13\ The order ticket requirement shall be 
the same with Exchange-Sponsored Terminals as it is for proprietary 
hand held terminals,\14\ i.e., if the trade information is not sent to 
the Exchange electronically, it will have to be conveyed by means of a 
written order ticket.
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    \13\ The Commission notes that the Exchange should consult with 
the Commission to determine if any future changes in technology used 
on the Exchange floor would be required to be submitted to the 
Commission pursuant to Section 19(b) of the Act. Moreover, any 
additional conditions or limitations placed on the use of hand held 
terminals should be submitted to the Commission as a proposed rule 
change pursuant to Section 19(b) of the Act. See Interactive Brokers 
LLC, Admin. Proc. File No. 3-9237 (March 19, 1998) (opinion of the 
Commission).
    \14\ See note 15 infra.
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    Once an order has been executed, the Exchange-Sponsored Terminal 
system will route trade information to POETS, which, in turn, will 
route the information to a computer for trade match and clearing 
purposes. At the same time, the Exchange will send a trade report to 
the Member Firm that entered the order. In addition, the Exchange will 
transmit trade information to OCC, OPRA and certain vendors.
    Order information sent through the Exchange Sponsored Terminal 
system will become audit trail information that is available to the 
Exchange for regulatory purposes. However, if an order is routed to the 
Member Firm booth by telephone or wire, and not through MFI, and the 
order is then sent to POETS or to a floor broker in the crowd using the 
Exchange-Sponsored Terminals, the audit trail information will commence 
when the order is sent from the booth. An audit trail of all actions 
taken by the Exchange-Sponsored Terminal that result in an interaction 
with the Server will be maintained. Upon receipt of an order in the 
Server from POETS or a booth device, the order will be time stamped and 
retained in the Server's database. When orders are executed at a 
Exchange-Sponsored Terminal, they will be time stamped upon receipt by 
the Server. Accordingly, the Exchange believes that the audit trail 
information should be more accurate than current information, which is 
recorded manually on order tickets.
    The Exchange will not prohibit floor brokers from using proprietary 
hand-held terminals \15\ for order entry on the Options Floor as long 
as they do not interfere with any Exchange-Sponsored Terminals, with 
POETS or with other equipment on the floor.\16\
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    \15\ The Commission notes that a rule filing to permit Exchange 
floor brokers to use proprietary order routing terminals on the 
Options Trading Floor is currently pending before the Commission. 
See Securities Exchange Act Release No. 38270 (Feb. 11, 1997), 62 FR 
7286 (Feb. 18, 1997) (Notice of filing of SR-PSE-97-02).
    \16\ The term ``interfere'' refers to electronic interference 
that may occur between a member's proprietary device and another 
electronic system or piece of equipment on the Trading Floor. For 
example, if the use of a proprietary devise on the floor caused the 
POETS automatic execution to halt, or if it disrupted telephonic 
communications on the floor, or if it prevented another member firm 
from being able to receive electronic orders through another order-
routing system, then the device causing the interference could not 
be used on the floor until it was rendered compatible with the order 
electronic systems in use.
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B. Prohibition of Market Making Function

    The Exchange is proposing to adopt new Rule 6.88(b) providing that 
no Floor Broker may knowingly use a Exchange-Sponsored Terminal, on a 
regular and continuous basis, to simultaneously represent orders to buy 
and sell options contracts in the same series for the account of the 
same beneficial holder. The rule further provides that if the Exchange 
determines that a person or entity has been sending, on a regular and 
continuous basis, orders to simultaneously buy and sell option 
contracts in the same series for the account of the same beneficial 
holder, the Exchange may prohibit orders for the account of such person 
or entity

[[Page 26664]]

from being sent through the Exchange's Member Firm Interface for such 
period of time as the Exchange deems appropriate.\17\
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    \17\ The Commission notes that a member would have the right to 
appeal any decision to suspend a member from using an Exchange-
Sponsored Terminal pursuant to Exchange Rule 11.7, Hearings and 
Review of Committee Act.
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C. Implementation

    The Exchange is proposing a two-phase approach to integrating the 
new hand-held technology into the floor environment. In Phase I, the 
Exchange will allow limited implementation of the program to evaluate 
the use of Exchange-Sponsored Terminals and to identify and correct any 
problems that may arise. In this regard, the Exchange will select a 
representative cross-section of floor members and off-floor members for 
the execution of various types of order flow in both lightly-traded and 
heavily-traded issues. Phase I will last for about four months. It will 
involve approximately two off-floor Member Firms, two Member Firm booth 
devices and 12 Exchange-Sponsored Terminals. The Exchange, in 
conjunction with its Options Floor Trading Committee, will select 
Members and Member Firms to participate in Phase I on an objective 
basis.\18\ During Phase I, floor brokers will not be permitted to 
transmit orders to other floor brokers (they will be limited to 
transmitting orders either to POETS or to a Member Firm booth).
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    \18\ Factors will include the nature of order flow (retail or 
institutional), the nature of the issue (lightly-traded or heavily-
traded), nature of the floor brokerage operation, time of 
application, limitations in the number of participants who may 
participate, and other such factors.
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    In Phase II, the Exchange will roll out the program on a floor-wide 
basis, allowing any qualified Floor Member or off-floor Member who 
wishes to participate in the program to do so.\19\ When Phase II is 
implemented, the Exchange-Sponsored Terminals program will be fully 
rolled out. Exchange-Sponsored Terminals will be approved for use in 
all trading crowds and will allow floor brokers to transmit orders to 
other floor brokers.
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    \19\ The term ``qualified Floor Member or off-floor Member'' 
refers to the requirement that all floor brokers and order flow 
providers who participate in the program must be approved by the 
Exchange to do so. Floor brokers are eligible to participate if they 
are registered with the Exchange as floor brokers pursuant to Rule 
6.44 and have arranged with a member firm to receive order flow 
through the system. Member firms are eligible to participate in the 
program if they have made arrangements with a floor broker for the 
transmission and execution of orders. Moreover, after Phase II is 
implemented, the Exchange has represented that it intends to impose 
a fee upon participants in the program in an amount to be specified 
in a rule change proposal to be filed with the Commission under 
Section 19(b) of the Act.
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III. Discussion

    Section 6(b)(5) of the Act \20\ requires that the rules of an 
exchange be designed to prevent fraudulent and manipulative acts and 
practices, promote just and equitable principles of trade, remove 
impediments to and perfect the mechanism of a free and open market, and 
in general to protect investors and the public interest. Section 
6(b)(7) of the Act \21\ requires that the rules of an Exchange be in 
accordance with Section 6(d) of the Act,\22\ and in general that an 
Exchange provide a fair procedure for the disciplining of members and 
determining whether to prohibit or limit a person's access to services 
offered by the exchange. Section 6(b)(8) of the Act \23\ requires that 
the rules of an exchange not impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Act. 
Section 11A(a)(1)(C)(ii) of the Act \24\ states that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure fair competition 
among brokers and dealers. For the reasons set forth below, the 
Commission finds that the proposed rule change is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange, and, in particular, the 
requirements of Sections 6(b)(5), 6(b)(7), 6(b)(8), and 11A(a)(1)(C) of 
the Act.\25\
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    \20\ 15 U.S.C. 78f(b)(5).
    \21\ 15 U.S.C. 78f(b)(7).
    \22\ 15 U.S.C. 78f(d). Section 6(d) of the Act, among other 
things, require that an exchange, in any proceeding to determine 
whether a member should be disciplined, bring specific charges, 
notify such member of and provide him with an opportunity to defend 
himself against such charges, and keep a record.
    \23\ 15 U.S.C. 78f(b)(8).
    \24\ 15 U.S.C. 78k-1(a)(1)(C).
    \25\ In approving these rules, the Commission has considered the 
proposed rules' impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
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    The Commission believes that the Exchange's proposal should foster 
coordination with persons engaged in facilitating transactions in 
securities, remove impediments to and perfect the mechanism of a free 
and open market, and protect investors and the public interest by 
expediting and making more efficient the process by which members can 
receive and execute options orders on the floor of the Exchange. The 
proposal also will promote fair competition among brokers and dealers 
and facilitate transactions in options on the Exchange. Finally, for 
the reasons described in more detail below, the Commission believes 
that the market making prohibition on the use of the Exchange-Sponsored 
Terminals adequately balances the potential benefits to be derived from 
Exchange-Sponsored Terminals with the important regulatory issues that 
are raised in connection with the potential use of Exchange-Sponsored 
Terminals for market making.
    As described above, proposed Rule 6.88(b) provides that no Floor 
Broker may knowingly use an Exchange-Sponsored Terminal, on a regular 
and continuous basis, to simultaneously represent orders to buy and 
sell options contracts in the same series for the account of the same 
beneficial holder. The Rule further provides that if the Exchange 
determines that a person or entity has been sending, on a regular and 
continuous basis, orders to simultaneously buy and sell option 
contracts in the same series for the account of the same beneficial 
holder, the Exchange may prohibit orders for the account of such person 
or entity from being sent through the Exchange's Member Firm Interface 
for such period of time as the Exchange deems appropriate.
    The Commission finds that the market making restriction is 
consistent with the Act for the following reasons. The Commission 
believes that the PCX's restriction on market making through the use of 
Exchange-Sponsored Terminals has been effected in a clear and 
reasonable manner that is not ambiguous nor overbroad, and that takes 
into account regulatory and market impact concerns, including those 
relating to quote competition and price discovery.\26\ Notably, the 
Exchange's proposal does not bar all two-sided limit orders. Instead it 
only restricts the acceptance of two-sided limit orders placed by the 
same beneficial holder in the performance of a market making function. 
The distinction between market making and brokerage activity is well 
established among market participants. Moreover, the language of 
proposed Rule 6.88(b) expressly restricts a floor broker from, on a 
regular and continuous basis, simultaneously representing orders to buy 
and sell options contracts in the same series for the account of the 
same beneficial holder, not the occasional entry of two-sided limit 
orders. This definition of

[[Page 26665]]

market making activity is consistent with the definition of market 
maker under the Act which states that a market maker ``holds himself 
out as being willing to buy and sell [a] security for his own account 
on a regular or continuous basis.'' \27\ Thus, the market making 
restriction on Exchange-Sponsored Terminal use for routing limit orders 
it he minimum necessary for the Exchange to bar Terminal use for off-
floor market making.
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    \26\ Cf., Securities Exchange Act Release No. 25842 (June 23, 
1988), 53 FR 24539 (approving certain restrictions on the use of 
telephones on the floor of the New York Stock Exchange), aff'd per 
curiam, 866 F.2d 47 (2d Cir. 1989).
    \27\ 15 U.S.C. 78c(a)(38).
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    Further, as the Commission has previously stated in approving 
market making restrictions similar to that being adopted by PCX, the 
Commission does not believe it unreasonable for a market to determine 
that the introduction of unregulated market making through floor 
brokerage hand held terminals may undermine its market maker system and 
potentially create disincentives for market makers to remain on an 
exchange trading floor.\28\ Accordingly, any burden on competition that 
arguably exists from PCX's restriction on using Exchange-Sponsored 
Terminals for market making is, in the Commission's view, justified as 
reasonable and appropriate to ensure adequate regulation of the PCX 
market.\29\
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    \28\ See Securities Exchange Act Release No. 38054 (Dec. 16, 
1996), 61 FR 67365 (Dec. 20, 1996) (order approving SR-CBOE-95-48).
    \29\ While the Commission recognizes that there may be ways to 
address the regulatory issues presented by off-floor market making 
through the use of floor broker hand-held terminals, the Act does 
not dictate that any particular approach be taken. The Commission 
believes that the manner in which the Exchange has chosen to address 
the regulatory issues presented by off-floor market making reflects 
the considered judgment of the PCX regarding the attributes of 
Exchange membership and the organization of its trading floor, and 
is a fair exercise of its powers as a national securities exchange.
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    The Exchange represents that it intends to implement the use of 
Exchange-Sponsored Terminals through the use of a two-phase approach. 
The Commission believes that it is consistent with the Act for the 
Exchange to limit the introduction of Exchange-Sponsored Terminals at 
this time given the Exchange's stated desire to identify and correct 
any problems that may arise. Further, the Exchange has stated that 
participants in Phase I will be selected on the basis of certain 
objective criteria.\30\ The Commission notes that after the completion 
of Phase I, which the Exchange represents should last approximately 
four months, Phase II will begin, allowing any qualified Floor Member 
or off-floor member who wishes to participate in the program to do 
so.\31\ As noted by the Exchange, all floor brokers that have 
registered with the Exchange as floor brokers pursuant to Rule 6.44 and 
have arranged with a member firm to receive order flow through the 
system will be eligible to participate in the Exchange-Sponsored 
Terminals program. The Commission expects the Exchange to allow any 
floor broker that meets the above requirements to participate in the 
program.
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    \30\ See supra note 18.
    \31\ The term ``qualified Floor Member or off-floor Member'' 
refers to the requirement that all floor brokers and order flow 
providers who participate in the program must be approved by the 
Exchange to do so. Floor brokers are eligible to participate if they 
are registered with the Exchange as floor brokers pursuant to Rule 
6.44 and have arranged with a member firm to receive order flow 
through the system. Member firms are eligible to participate in the 
program if they have made arrangements with a floor broker for the 
transmission and execution of orders. Moreover, after Phase II is 
implemented, program participants will be required to pay the 
Exchange a fee in an amount to be specified in a rule change 
proposal to be filed with the Commission.
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    In addition, the Commission believes that the proposed 
interpretation to Rule 6.67, under which the transmission of an order 
that is received by means of an Exchange-Sponsored Terminal or 
proprietary hand-held terminal will be deemed to constitute a written 
order for the purposes of Rule 6.67, in general, protects investors and 
the public interest. The Commission believes the proposed commentary to 
Rule 6.67 will provide a more efficient means of communicating orders 
on the floor. The Commission notes that while this proposed Commentary 
effects the format of the order ticket, the Exchange has represented 
and the Commission expects that the required content of the order 
ticket would not be altered.\32\
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    \32\ Telephone conversation between Michael D. Pierson, Senior 
Attorney, Regulatory Policy PCX and David Sieradzki, Attorney, 
Division, SEC on April 22, 1998. The Commission notes that any 
change to the required content of an order ticket would have to be 
submitted to the Commission as a proposed rule change under Section 
19(b) of the Act.
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    Finally, regarding the use of proprietary hand-held terminal 
systems on the floor of the Exchange; the Exchange has represented that 
it intends to allow the use of proprietary hand-held terminal systems 
on the floor of the Exchange provided that they do not electronically 
interfere \33\ with existing Exchange systems.\34\ As discussed above, 
the Exchange notes that if, for example, the use of a proprietary 
devise on the floor caused the POETS automatic execution to halt, or if 
it disrupted telephonic communications on the floor, or if it prevented 
another member firm from being able to receive electronic orders 
through another order-routing system, then the device causing the 
interference could not be used on the floor until it was rendered 
compatible with the other electronic systems in use. The Commission 
finds that this restriction is reasonable given that it is limited to 
electronic interference with other exchange systems and that an 
interfering system would be permitted to return to the floor once it is 
made compatible with other exchange systems. The Commission notes that 
any implementation of this provision to restrict competition or the 
introduction of new technology onto the floor of the Exchange would be 
inconsistent with the Exchange's rules and with the Act. In summary, 
the Commission emphasizes and finds it very important that approval of 
the PCX's Exchange-Sponsored Terminals proposal will not restrict 
members from using their own proprietary terminal systems provided that 
they do not electronically interfere with existing Exchange 
systems.\35\
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    \33\ The term ``interfere'' refers to electronic interference 
that may occur between a member's proprietary device and another 
electronic system or piece of equipment on the Trading Floor.
    \34\ The Exchange has represented that this policy includes 
allowing Exchange members to interface electronically with MFI, 
POETS or the limit order book; provided that the proprietary system 
is properly configured to interface with these systems. Telephone 
conversation between Michael D. Pierson, Senior Attorney, Regulatory 
Policy, PCX and David Sieradzki, Attorney, Division, SEC on April 6, 
1998.
    \35\ See supra note 16.
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    The Commission finds good cause for approving Amendment No. 2 to 
the proposed rule change prior to the thirtieth day after the date of 
publication of notice of filing thereof in the Federal Register. 
Amendment No. 2 amends the language in proposed Commentary .02 to Rule 
6.67 to indicate that orders received through proprietary hand held 
terminals will be considered to be in writing for the purposes of Rule 
6.67. Commentary .02, as originally proposed, applied only to Exchange-
Sponsored Terminals. Amendment No. 2 ensures that all systems, whether 
Exchange sponsored or not will have the same regulatory requirements. 
As a result, the Commission does not believe that Amendment No. 2 
raises any new regulatory issues. Further, the Commission notes that 
the original proposal was published for the full 21-day comment period 
and no comments were received by the Commission. Accordingly, the 
Commission believes there is good cause, consistent with Sections 
6(b)(5) and 19(b) \36\ of the Act, to approve Amendment No. 2 to the

[[Page 26666]]

Exchange's proposal on an accelerated basis.
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    \36\ 15 U.S.C. 78f(b)(5) and 15 U.S.C. 78s(b).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 2 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, 
DC 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 at the Commission's Public Reference Room. Copies of such 
filing will also be available for inspection and copying at the 
principal office of the above-mentioned self-regulatory organization. 
All submissions should refer to File No. SR-PCX-97-28 and should be 
submitted by June 3, 1998.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\37\ that the proposed rule change (SR-PCX-97-28) is approved as 
amended.
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    \37\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-12702 Filed 5-12-98; 8:45 am]
BILLING CODE 8010-01-M