[Federal Register Volume 64, Number 10 (Friday, January 15, 1999)]
[Notices]
[Pages 2694-2695]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-923]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40888; File No. SR-PCX-98-57]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. To Amend Equity Floor Procedure 
Advice 2-C To Remove an Exception Regarding Trade Reporting 
Responsibilities

January 6, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act''),\1\ notice is hereby given that on 
November 6, 1998, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'') 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).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    PCX is proposing to change Equity Floor Procedure Advice 2-C. 
Specifically, the Exchange proposes to delete the second exception to 
Rule 5.12 in Equity Floor Procedure Advice 2-C. Below is the text of 
the proposed rule change. Proposed new language is in italics and 
deletions are in [brackets].
* * * * *

EQUITY FLOOR PROCEDURE ADVICES

* * * * *

2-C

para. 7630 Subject: Reporting of Transactions Executed at the Exchange

    Rule 5.12(a) [I, Section 16(a), of the Rules of the Board of 
Governors of the Pacific Exchange, Inc.] provides that the seller is 
responsible for ensuring that a transaction executed at the Exchange 
is properly recorded. This requirement is subject to the following 
[two] exception[s]: [1. ]Pursuant to Rule 5.12(b), [I, Section 
16(b),] inter-floor ``limit sell orders'' are to be reported from 
the floor on which the order was placed and executed.
    [2. Transactions in local issues in which the specialist acts as 
the buyer and the seller is located on the opposite trading floor 
are to be promptly reported to the tape by the specialist. The 
seller is required to submit a ``goldenrod'' ticket to report the 
transaction for clearing purposes only.]
    The Exchange has found that this [these] exception[s] to the 
general reporting procedures occasionally results in transactions 
not being reported to the tape. Because it is essential that all 
trades executed at the Exchange be promptly reported for 
dissemination to the Exchange community and the public, violations 
of the trade reporting requirements will be investigated and may 
result in the imposition of fines or other disciplinary action.
    The following schedule will serve as a guideline for penalties 
to be imposed for violations of this floor procedure advice:

1st Violation: Official Warning
2nd Violation: $250.00
3rd Violation: $500.00

    This schedule is based on the number of violations for a 
particular security, calculated on a monthly basis. This schedule is 
intended to apply to inadvertent violations of this [the] floor 
procedure advice that [which] are not attributable to clerical 
errors by Exchange staff or other mitigating circumstances. In cases 
of deliberate violations or other aggravated circumstances, other 
disciplinary action may be deemed to be appropriate.
* * * * *

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 proposed rule change. 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.

[[Page 2695]]

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

1. Purpose
    Currently, PCX Rule 5.12 states that ``The seller shall be 
responsible for transactions being promptly recorded by the floor 
reporters.'' This requirement is subject to two exceptions in Equity 
Floor Procedure Advice 2-C, the second of which holds that, 
``transactions in local issues in which the specialist acts as the 
buyer and the seller is on the opposite trading floor are to be 
promptly reported to the tape by the specialist. The seller is required 
to submit a `goldenrod' ticket to report the transaction for clearing 
purposes only.''
    The PCX proposes to delete the second exception to Rule 5.12 in 
Equity Floor Procedure Advice 2-C so that the general requirement in 
Rule 5.12 of seller responsibility shall apply. The Exchange believes 
that the conditions underlying the original exception have changed and 
that there is no longer any reason to exempt these types of 
transactions from the basic requirement. The PCX believes that the 
deletion of this exception will make the obligation to report 
transactions consistent with the general requirement that sellers 
report the trades.
2. Statutory Basis
    PCX believes the proposed rule change is consistent with Section 
6(b) \2\ of the Act, in general, and furthers the objectives of Section 
6(b)(5),\3\ in particular, because it is designed to perfect the 
mechanism of a free and open market, to promote just and equitable 
principles of trade, and to protect investors and the public interest.
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    \2\ 15 U.S.C. 78f(b).
    \3\ 15 U.S.C. 78f(b)(5).
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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

    Within 35 days of the 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 the self-regulatory organization consents, the Commission will:
    (A) By order approve the 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 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, D.C. 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 also will be 
available for inspection and copying at the principal office of PCX. 
All submissions should refer to File No. SR-PCX-98-57 and should be 
submitted by February 5, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-923 Filed 11-14-99; 8:45 am]
BILLING CODE 8010-01-M