[Federal Register Volume 63, Number 209 (Thursday, October 29, 1998)]
[Notices]
[Pages 58082-58083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29008]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40590; File No. SR-PCX-98-49]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Specialist Post Fee Waiver Program Amendments

October 22, 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 September 24, 1998, as amended on October 13, 1998,\3\ 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 the Exchange. 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.
    \3\ See Letter from Michael Pierson, Senior Attorney, PCX, to 
Joshua Kans, Attorney, Division of Market Regulation, Commission, 
dated October 13, 1998 (``Amendment No. 1''). Amendment No. 1 
eliminated a proposal to permit the Exchange's Executive Committee 
to determine whether to allow otherwise eligible specialists to 
participate in the Specialist Post Fee Waiver Program. Amendment No. 
1 also clarified the scope of the rule change's future effect, and 
clarified the Exchange's justification for the rule change's 
immediate effectiveness.
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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 modify its Specialist Post Fee Waiver 
Program (``Program'') by adding a requirement that any participating 
firm must remain in the Program for a minimum of six months or forego 
the benefits it has received during its participation in the Program.

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 Exchange 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 Exchange 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

(1) Purpose
    On February 19, 1998, the Exchange's Specialist Post Fee Waiver 
Program became effective upon filing.\4\ The Program is intended to 
provide financial incentives and short-term cost relief for specialist 
firms that are approved by the Exchange to operate specialist posts 
that will no longer be operated by another firm. Under the Program, if 
a specialist firm is approved to assume financial and operational 
responsibility for a specialist post, the specialist firm's fixed 
specialist fees are waived for three months. The Program also allows 
participating specialist firms to earn fee credits, based on monthly 
trading

[[Page 58083]]

volumes, once the original three months have passed and the firm's 
fixed specialist fees have been reinstated. These fee credits, which 
are available for three months, are intended to serve as incentives for 
specialist firms to bring equity order flow to the Exchange.
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    \4\ See Exchange Act Release No. 39745 (March 12, 1998), 63 FR 
13440 (March 19, 1998) (notice of filing and immediate effectiveness 
of SR-PCX-98-11).
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    The Exchange is proposing to modify the Program so that a 
specialist firm would need to maintain financial and operational 
responsibility for the new post for a minimum of six months in order to 
receive fee credits or fee waivers under the Program. This requirement 
is intended to assure that firms will not take on a new post for less 
than six months and then abandon it after having received the Program 
benefits. Accordingly if the Exchange approves a firm for participation 
in the Program, and the firm abandons the post before six months have 
passed, the firm will be obligated to pay the fixed specialist fees 
that otherwise would have applied while the firm was responsible for 
the post.
    The Exchange notes that the terms of this rule filing will only 
apply to specialist firms that provide new backing to a specialist post 
under the Program after the effective date of this rule filing.
(2) Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b) of the Act,\5\ in general, and furthers the objectives of 
Section 6(b)(5),\6\ in particular, in that it is designed to promote 
just and equitable principles of trade and to protect investors and the 
public interest. The Exchange also believes that the proposal is 
consistent with Section 6(b)(4) of the Act \7\ in that it is designed 
to provide for the equitable allocation of dues, fees and other charges 
among its members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C 78f(b)(4).
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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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \8\ and subparagraph (e)(2) of Rule 19b-4 
thereunder \9\ because it is establishing or changing a due, fee or 
other charge. At any time within 60 days of the filing of such proposed 
rule change, the Commission may summarily abrogate such rule change if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(e)(2).
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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.\10\ 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 
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 the PCX. All 
submissions should refer to File No. SR-PCX-98-49 and should be 
submitted by November 19, 1998.

    \10\ In reviewing these rules, the Commission has considered the 
proposed rule change's impact on efficiency, competition and capital 
formation. 15 U.S.C. 78c(f).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-29008 Filed 10-28-98; 8:45 am]
BILLING CODE 8010-01-M