[Federal Register Volume 63, Number 166 (Thursday, August 27, 1998)]
[Notices]
[Pages 45892-45893]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23073]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40348; File No. SR-PCX-98-36]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to the OptiMark System--
Specialist Bids and Offers

August 20, 1998
    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 July 2, 1998, 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, II and III 
below, which Items have been prepared by PCX. 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. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange is proposing to adopt new Rule 15.3(b), which would 
require Specialists to ensure that their best bids and offers will be 
represented in the OptiMark System. Proposed new language is 
italicized; proposed deletions are in brackets.
* * * * *

para.6731  Access

    Rule 15.2. The PCX Application shall be available for all 
interested members that decide to become Users. The Exchange will 
assure that each PCX Specialist is provided with appropriate access to 
the PCX Application for the purpose of submitting Profiles from the 
Specialist's Post. A non-member User may obtain access to the PCX 
Application only if such access is authorized in advance by one or more 
Designated Brokers in accordance with the terms of the applicable Give-
Up Agreement and the Transmission Consent Agreement. Both agreements 
shall be in force before a non-member User may be given the 
authorization to obtain access to the PCX Application. At a minimum, 
the Give-Up Agreement and the Transmission Consent Agreement shall 
include any applicable credit limits imposed by the Designated Broker 
on the non-member User; the Designated Broker's undertaking that it is 
responsible for that non-member User's Orders and resulting 
transactions; and such other terms and conditions that may be agreed to 
from time to time. The Exchange shall be provided with a written 
statement from the Designated Broker acknowledging its responsibility 
for such Orders and resulting transactions.

para.6732  Entry of Profiles and Generation of Orders

    Rule 15.3. Entry of Profiles and General of Orders
    (a)--No change.
    (b) Specialist Obligations--Specialists must ensure that at all 
relevant times during regular trading hours, their best bids and offers 
(whether reflecting limit orders or the Specialist's own interest) will 
be included in the OptiMark System as Profiles.
    (c)-(d) [(b)-(c)]--No change.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, PCX included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
PCX 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

Purpose
    The Exchange is proposing to adopt new Rule 15.3(b) to require PCX 
Specialists to use the PCX Application of the OptiMark System (``PCX 
Application'') with respect to the bids and offers that they publish. 
The purpose of the rule is to facilitate best execution of customer 
orders by requiring PCX Specialists' best bids and offers to be 
included in the OptiMark System as Profiles. Once included, such 
trading interest is expected to interact with other trading interest, 
resulting in improved execution opportunities on the PCX. The Exchange 
believes that the rule change will facilitate interaction between the 
PCX Application and existing trading interest on the PCX floors, 
thereby promoting more efficient and effective market operations.
    Specifically, proposed Rule 15.3(b) provides that PCX Specialists 
must ensure that at all relevant times during regular trading hours, 
their best bids and offers (whether reflecting limit orders or the 
Specialist's own interest) will be included in the OptiMark System.
    The Exchange is also proposing to modify PCX Rule 15.2 by adding 
the following provision: ``The Exchange will assure that each 
Specialist is provided with appropriate access to the PCX Application 
for the purpose of submitting Profiles from the Specialist's Post.''

Basis

    The Exchange believes that the proposal is consistent with Section 
6(b)(5) of the 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 Exchange believes that the proposed rule 
change is consistent with provisions of Section 11A(a)(1)(B) of the 
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 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 PCX consents, the Commission will:

[[Page 45893]]

    (A) by order approve such proposed 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 proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary, Securities and Exchange 
Commission, 450 Fifth Street NW, 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 in the Commission's 
Public Reference Room, 450 Fifth Street NW, Washington, DC 20549. 
Copies of such filing will also be available for inspection and copying 
at the principal office of PCX. All submissions should refer to File 
No. SR-PCX-98-36 and should be submitted by September 17, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\3\
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    \3\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-23073 Filed 8-26-98; 8:45 am]
BILLING CODE 8010-01-M