[Federal Register Volume 63, Number 250 (Wednesday, December 30, 1998)]
[Notices]
[Page 71993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34515]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40817; File No. SR-PCX-98-54]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change Relating to Extension of PCX 
Specialist Evaluation Program for One Year

December 21, 1998.

I. Introduction

    On November 2, 1998, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission'' or ``SEC''), 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 to extend its specialist 
evaluation pilot program for an additional year, to January 1, 2000. 
The Commission published the proposed rule change for comment in the 
Federal Register on November 19, 1998.\3\ No comments were received. 
This order approves the proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 40675 (November 12, 
1998), 63 FR 64307.
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II. Description of the Proposal

    On December 22, 1997, the Commission approved a one-year extension 
of the Exchange's pilot program for the evaluation of equity 
specialists.\4\ The filing was intended to establish an overall score 
and individual passing scores for specialists, replace the ``Bettering 
the Quote'' criterion with ``Price Improvement,'' and lower the 
weighting of the ``Specialist Evaluation Questionnaire'' criterion from 
15% to 10% so that Price Improvement could be given a weight of 10%. 
Subsequently, the Commission approved an Exchange proposal to codify 
the aforementioned changes.\5\ The Exchange is requesting a one-year 
extension of the pilot program. At this time, the Exchange is not 
seeking to modify the pilot program.
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    \4\ Securities Exchange Act Release No. 39477 (December 22, 
1997), 62 FR 68334 (December 31, 1997).
    \5\ Exchange Act Release No. 39976 (May 8, 1998), 63 FR 26834 
(May 14, 1998).
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III. Discussion

    After careful review, the Commission finds that the PCX's proposal 
to extend its pilot program is consistent with the requirements of 
sections 6(b) and 11 of the Act \6\ and the rules and regulations 
thereunder applicable to a national securities exchange. Specifically, 
the Commission finds that the proposed rule change is consistent with 
the Section 6(b)(5) requirement that the rules of an exchange be 
designed, among other things, to promote just and equitable principles 
of trade, to remove impediments to and perfect the mechanism of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest.\7\ Further, the Commission 
finds that the proposal is consistent with Section 11(b) of the Act \8\ 
and Rule 11b-1 thereunder which allow securities exchanges to 
promulgate rules relating to specialists in order to maintain fair and 
orderly markets and to remove impediments to and perfect the mechanism 
of a national market system.
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    \6\ 15 U.S.C. 78f(b) and 78k.
    \7\ In approving this proposed rule change, the Commission notes 
that it has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78k(b).
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    According to the Exchange, the pilot program is operating 
successfully and without any problems. The Commission believes it is 
appropriate to extend the current pilot program for an additional year, 
until January 1, 2000 so that the Exchange will have an opportunity to 
continue reviewing and evaluating the program before seeking permanent 
approval. The Commission notes that the October 29, 1998 report filed 
by the Exchange indicates that it is reasonably monitoring the 
effectiveness of the program. The Commission's rationale for approving 
the extension in December 1997 continues to apply and is incorporated 
by reference into this order.\9\ In addition, the Commission requests 
that the PCX submit a report to the Commission, by October 30, 1999, 
containing the information described in the December 1997 order for the 
first, second and third quarters of 1999.
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    \9\ See supra note 4.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-PCX-98-54) be, and hereby 
is, approved.

    \10\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-34515 Filed 12-29-98; 8:45 am]
BILLING CODE 8010-01-M