[Federal Register Volume 65, Number 221 (Wednesday, November 15, 2000)]
[Notices]
[Pages 69109-69111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29181]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43526 File No. SR-PCX-00-35]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 to the 
Proposed Rule Change by the Pacific Exchange, Inc. Relating to Equity 
Housekeeping Amendments

November 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 24, 2000, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), on behalf of its wholly-owned subsidiary, PCX Equities, 
Inc. (``PCXE''), filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the PCX. 
On November 2, 2000, the PCX submitted Amendment No. 1 to the proposed 
rule change.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change and Amendment No. 1 to 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 Hassan Abedi, Attorney, Regulatory Policy, 
PCX, to Nancy Sanow, Assistant Director, Division of Market 
Regulation, Commission, dated November 1, 2000 (``Amendment No. 
1''). In Amendment No. 1, the PCX made a correction to Rule 6.3 by 
adding the word ``must'' which had inadvertently been left out. The 
PCX also clarified that the removal of the phrase ``or other 
appropriately designated forms'' from Rule 6.3 was not approved by 
Securities Exchange Act Release No. 41083 (February 22, 1999), 64 FR 
10052 (March 1, 1999) (SR-PCX-98-52). The phrase is being removed 
because Equity Trading Permit (``ETP'') Holders, Equity ASAP 
Holders, and ETF Firms are only required to submit SEC Form X-17A-5.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to make various housekeeping and technical 
changes to certain previously approved PCX rules by making minor 
conforming changes to the existing language in order to incorporate 
those changes into the PCXE rules. The text of the proposed rule change 
is available at the Office of the Secretary, PCX, and at the 
Commission.

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
    The Exchange is proposing to make the following changes below to 
incorporate previously approved changes to the rules of the PCX into 
the PCXE rules.\4\ Specifically, the Exchange is proposing to apply the 
PCX rule language to ETP Holders, Equity ASAP Holders, and ETP Firms by 
incorporating such rule language into the PCXE rules.\5\
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    \4\ The rules of the PCX that governed the equities trading 
business of the Exchange were amended and renumbered when the PCXE 
was created. See Securities Exchange Act Release No. 42759 (May 5, 
2000), 65 FR 30654 (May 12, 2000). Thus, the PCX rules that govern 
the equities business are now referred to as PCXE rules.
    \5\ Language was changed mainly to refer to ``ETP Holders, 
Equity ASAP Holders, and ETP Firms'' (in the PCXE rules) instead of 
``members or member organizations'' (in the PCX rules), and to refer 
to the ``Corporation'' (in the PCXE rules) instead of ``Exchange'' 
(in the PCX rules).
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    a. PCXE Rule 2--Equity Trading Permits. Mandatory Decimal Price 
Testing--The Exchange proposes to add PCXE Rule 2.25, based upon PCX 
Rule 1.15(b).\6\ Minor conforming changes

[[Page 69110]]

have been made to existing language of the PCX Rule in order to 
incorporate it into the PCXE rules.
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    \6\ See Securities Exchange Act Release No. 42998 (June 30, 
2000), 65 FR 42412 (July 10, 2000).
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    b. PCXE Rule 7--Equities Trading--Off-Board Trading Restrictions. 
Cabinet Dealings--The Exchange proposes to amend PCXE Rule 7.20(a), 
formerly PCX Rule 5.5(b), to eliminate the sentence ``Securities placed 
in the CABINET System, until removed, may be traded off the Corporation 
without compliance with Rule 7.49(b).'' The SEC previously approved the 
removal of this sentence from PCX Rule 5.5(b).\7\ The Exchange proposes 
to eliminate the sentence in order reflect this change in PCXE Rule 
7.20(a). Over the Counter Execution of Equity Securities Transactions--
The Exchange proposes to eliminate PCXE Rule 7.49(a)-(e), formerly PCX 
Rules 5.43, 5.44, 5.46, 5.48, and 5.49.\8\
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    \7\ See Securities Exchange Act Release No. 42890 (June 1, 
2000), 65 FR 36877 (June 12, 2000).
    \8\ Id.
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    c. PCXE Rule 7--Equity Trading--Trading Differentials. Trading 
Differentials--The Exchange proposes to amend PCXE Rule 7.10(a), 
formerly PCX Rule 5.3(b), by adding Commentary .04.\9\ The Exchange 
also proposes to add the words ``Nasdaq-100 Shares'' to Commentary 
.03.\10\
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    \9\ See Securities Exchange Act Release No. 42822 (May 24, 
2000), 65 FR 35150 (June 1, 2000).
    \10\ See Securities Exchange Act Release No. 41712 (August 5, 
1999), 64 FR 44072 (August 12, 1999).
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    PCX Equities, Inc. Application of the OptiMark System--The Exchange 
proposes to amend PCXE Rule 7.71(a), formerly PCX Rule 15.1, by adding 
the phrase ``provided, however, that Orders may be generated from 
central processing of the profiles designated for the midpoint pricing 
service by the OptiMark System in conformance with the trading 
differential in Rule 7.10(a), Commentary .04.'' \11\
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    \11\ See supra note 6.
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    d. PCXE Rule 9--Conducting Business with the Public. 
Advertisements, Market Letters and Sales Literature Relating to 
Options--The Exchange proposes to amend the language in paragraphs (E)-
(G) of Commentary .03 to PCXE Rule 9.28(e), adapted from PCX Rule 
9.28.\12\
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    \12\ See Securities Exchange Act Release No. 42577 (March 27, 
2000), 65 FR 17329 (March 31, 2000).
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    3. PCXE Rule 5--Listings. Financial Reports and Related Notices 
(EDGAR Rule Filing)--The Exchange proposes to amend PCXE Rule 
5.3(i)(1)(i), formerly PCX Rule 3.3(t)(1)(i), by adding Commentary 
.04.\13\
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    \13\ See Securities Exchange Act Release No. 42431 (February 16, 
2000), 65 FR 9026 (February 23, 2000).
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    f. PCXE Rule 7--Equity Trading--Intermarket Trading System Plan. 
Definitions--The Exchange proposes to amend PCXE Rule 7.66, formerly 
PCX Rule 5.20, by adding a provision that seeks to define the term 
``PCX Coordinating Specialist,'' and by adding Commentary .04.\14\
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    \14\ See Securities Exchange Act Release No. 42708 (April 20, 
2000), 65 FR 25780 (May 3, 2000).
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    g. PCXE Rule 8--Trading of Certain Equity Derivatives. Nasdaq-100 
Index--The Exchange proposes to add PCXE Rule 8.100(g) and Commentary 
.03, formerly PCX Rule 8.300(g) and Commentary .03, relating to the 
trading of Nasdaq-100 Index shares.\15\
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    \15\ See supra note 7.
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    h. Equity Floor Procedure Advice 2-C. Reporting of Transactions--
The Exchange proposes to amend Equity Floor Procedure Advice 2-C by 
removing one of the exceptions provided for reporting of transactions 
from PCXE Rule 7.37(a).\16\
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    \16\ See Securities Exchange Act Release No. 41083 (February 22, 
1999), 64 FR 10052 (March 1, 1999).
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    i. PCXE Rule 6--Business Conduct. Prevention of the Misuse of 
Material, Nonpublic Information--The Exchange proposes to amend PCXE 
Rule 6.3, adapted from PCX Rule 2.6(e), to add the phrase ``for whom 
the Corporation is the Designated Examining Authority (``DEA''),'' to 
add Commentary .02, and to eliminate Commentary .04.\17\ The Exchange 
also proposes to remove certain unnecessary language.\18\
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    \17\ See Securities Exchange Act Release No. 40863 (December 30, 
1998), 64 FR 1057 (January 7, 1999).
    \18\ See Amendment No. 1, supra note 3.
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    j. PCXE Rule 5--Listing. General Provisions and Definitions--The 
Exchange proposes to add PCXE Rule 5.1(b)(15), formerly PCX Rule 
3.1(b)(15).\19\
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    \19\ See Securities Exchange Act Release No. 41983 (October 6, 
1999), 64 FR 56008 (October 15, 1999).
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    Investment Company Units--The Exchange is proposing to add PCXE 
Rule 5.2(j)(3), formerly PCX Rule 3.2(k). The Exchange is also 
proposing to add PCXE Rules 5.5(g)(1) and (2), formerly Rules 3.5(g) 
and (h). Finally, the Exchange proposes to add Commentaries .02 and .03 
to PCXE Rule 7.28(a)(1), formerly PCX Rule 5.33(a).\20\
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    \20\ See id.
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    k. PCXE Rule 6--Business Conduct. Communications to and on the 
Trading Facilities--The Exchange proposes to add PCXE Rule 6.17, 
adapted from PCX Rule 4.23.\21\
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    \21\ See Securities Exchange Act Release No. 40852 (December 28, 
1998), 64 FR 1058 (January 7, 1999).
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    l. PCXE Rule 4--Capital Requirements and Financial Reports, 
Margins. Exceptions to Margins--The Exchange proposes to amend PCXE 
Rule 4.15(c)(5), adapted from PCX Rule 2.15-2.16, by replacing the 
phrase ``margin required by the other provisions of this Rule'' with 
the phrase ``haircut requirements of SEC Rule 15c3-1.'' Also the 
Exchange proposes to add Rule 4.15(c)(6).\22\
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    \22\ See Securities Exchange Act Release No. 42453 (February 24, 
2000), 65 FR 11620 (March 3, 2000).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of section 6(b) \23\ of the Act, in general, and 
section 6(b)(5),\24\ in particular, because 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, and, in general, to protect investors and the public 
interest.
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    \23\ 15 U.S.C. 78f(b).
    \24\ 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

    No written comments were solicited or received with respect to the 
proposed rule change.

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) \25\ of the Act and subparagraph (f)(3) of Rule 19b-4 \26\ 
thereunder because it is concerned solely with the administration of 
the Exchange. 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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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(3).
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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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange

[[Page 69111]]

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 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-00-35 and should be 
submitted by December 6, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-29181 Filed 11-14-00; 8:45 am]
BILLING CODE 8010-01-M