[Federal Register Volume 63, Number 247 (Thursday, December 24, 1998)]
[Notices]
[Pages 71325-71326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34128]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40806; File No. SR-PCX-98-58]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. to
Terminate its Specialist Post Fee Waiver Program
December 18, 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 November 23, 1998, as amended on December 15, 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 Robert Pacileo, Staff Attorney, Regulatory
Policy, PCX, to Richard Strasser, Assistant Director, Division of
Market Regulation, Commission, dated December 14, 1998 (``Amendment
No. 1''). Amendment No. 1 changed the PCX's justification for the
proposed rule change's immediate effectiveness, and clarified the
date PCX approved the proposal internally.
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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 terminate its Specialist Post Fee
Waiver Program.
[[Page 71326]]
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
In March 1998, the Commission approved a proposal by the Exchange
to adopt a Specialist Post Fee Waiver Program (the ``Program'') to
provide short-term cost relief to new specialist firms that agreed to
operate a specialist post, and to existing specialist firms that agreed
to operate an additional specialist post on the Equity Floors of the
Exchange.\4\ 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.\5\ The program also allows participating specialist firms to
earn fee credits, based on monthly trading volume, once the original
three months have passed and the firm's fixed specialist fees have been
reinstated.
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\4\ See Securities Exchange Act Release No. 39745 (March 12,
1998), 63 FR 13440 (March 19, 1998).
\5\ The specialist fees that are waived under the program
include: Exchange Member Dues, the Floor Privilege Fee, the
Specialist Facility Fee, the Specialist Systems Fee, Workstation
Fees, the Market Data Fee, the Card Access Fee, the Pacific Clearing
Corporation (``PCC'') Post Cashiering Fee and the PCC Post Clearing
Fee. Some of the fees waived will vary based on the number of staff
the firm has on the Floor and the services the firm uses.
Consequently, the actual dollar amount of waived fees will vary
slightly by firm. Generally, waived fees will average $7,330 per
month.
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In October 1998, the Commission approved a proposal by the Exchange
to modify the Specialist Post Fee Waiver Program 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.\6\
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\6\ See Securities Exchange Act Release No. 40590 (October 22,
1998), 63 FR 58082 (October 29, 1998).
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The Exchange believes the Specialist Post Fee Waiver Program has
fulfilled its purpose and, accordingly, the Exchange is now proposing
that it be terminated. The program was intended to provide short-term
relief to new backers in a period of major industry change.\7\ A
decrease in seat prices and stronger demand for recently available
posts indicates there is less of a need for the Exchange to provide a
financial incentive to back posts. In addition, the PCX has recently
implemented guidelines for approving requests to consolidate specialist
posts. Firms that consolidate specialist posts are able to reduce seat-
related costs.\8\
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\7\ Those posts already approved under the Specialist Post Fee
Waiver program will continue to participate in the waiver program
until their six-month participation period has ended.
\8\ See Securities Exchange Act Release No. 40449 (September 17,
1998), 63 FR 51110 (September 24, 1998).
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(2) Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act,\9\ in general, and furthers the objectives of
Section 6(b)(5),\10\ 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 \11\ in that it is designed
to provide for the equitable allocation of dues, fees and other charges
among its members.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 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
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 is effective upon filing pursuant to
Section 19(b)(3)(A)(ii) of the Act,\12\ and subparagraph (e)(2) of Rule
19b-4 thereunder,\13\ in that it establishes or changes a due, fee or
other charge imposed by the self-regulatory organization. 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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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 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.\14\ 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 the PCX. All
submissions should refer to File No. SR-PCX-98-58 and should be
submitted by January 14, 1999.
\14\ In reviewing this proposal, the Commission has considered
the proposal'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.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-34128 Filed 12-23-98; 8:45 am]
BILLING CODE 8010-01-M