[Federal Register Volume 65, Number 31 (Tuesday, February 15, 2000)]
[Notices]
[Pages 7584-7585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3435]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42401; File No. SR-PCX-99-38]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to Statistical Reports 
Provided to Market Makers

February 7, 2000.
    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 October 5, 1999, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the

[[Page 7585]]

Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II and III below, which Items have been 
prepared by the PCX. The Exchange filed Amendment No. 1 \3\ to the 
proposed rule change on January 11, 2000. 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\ Letter from Robert P. Pacileo, Staff Attorney, Regulatory 
Policy, PCX, to Richard C. Strasser, Assistant Director, Division of 
Market Regulation, Commission, dated January 7, 2000 (``Amendment 
No. 1''). Amendment No. 1 adds Exchange Rule 6.41 to the text of 
Exchange Rule 6.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to adopt a new procedure, codified in 
proposed Exchange Rule 6.41, whereby the Exchange would furnish PCX 
market makers with statistical reports that reflect trading volumes and 
identify specific trading activity in particular option issues to be 
used by PCX market makers for marketing and business development 
purposes. Below is the text of the proposed rule change. Proposed new 
language is in italics.

Market Maker Marketing Reports

    Rule 6.41. The Exchange will provide its Market Makers with 
statistical reports designed to measure trading volume and 
participation in trading activity in each option issue traded on the 
Exchange. The reports will provide monthly trading information that 
will identify, by order flow provider, the issue and number of 
contracts traded, the LMM post where the issue is traded, the contra 
and executing broker symbols, and whether the trade was executed 
through the Exchange's Automatic Execution System, through the Limit 
Order Book, or manually in the trading crowd.

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 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. 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
    The Exchange proposes to furnish its market makers with statistical 
reports designed to measure trading volume and participation in trading 
activity in each option issue traded on the Exchange. The reports will 
provide monthly trading information that will identify, by order flow 
provider, the issue and number of contracts traded, the Lead market 
maker (``LMM'') post where the issue is traded, the contra and 
executing broker symbols, and whether the trade was executed through 
the Exchange's Automatic Execution System, through the Limit Order 
Book, or manually in the trading crowd.
    The Exchange believes these reports will help market makers develop 
marketing plans specific to order flow providers that the market makers 
can use to help them increase order flow sent to the PCX. The reports 
will identify which order flow providers currently are bringing trades 
to the PCX and how those orders are being executed. In addition, the 
reports are designed to help PCX market makers support their business 
relationships and encourage further business development with those 
order flow providers. Furthermore, these reports will help the market 
makers identify specific customers to whom they should direct their 
marketing efforts. The Exchange believes that these reports will help 
the market makers focus on specific business needs of their customers, 
so that they can attract more business to the PCX. Finally, the 
Exchange believes the reports will help it compete for order flow in 
multiply traded issues.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the Act 
\4\ in general, and furthers the objectives of Section 6(b)(5) \5\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    The Exchange did not solicit or receive written comments on the 
proposed rule change.

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 the Exchange consents, the Commission will:
    (A) by order approve such 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, NW, Washington, DC 20549-0609. 
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. Copies of the 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-99-38 and should 
be submitted by March 7, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-3435 Filed 2-14-00; 8:45 am]
BILLING CODE 8010-01-M