[Federal Register Volume 66, Number 72 (Friday, April 13, 2001)]
[Notices]
[Pages 19273-19274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9114]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44149; File No. SR-PCX-00-47]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Adopting Formal Procedures for 
Members to Submit Proposals to List Option Classes on the Exchange

April 4, 2001.
    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 December 13, 2000, 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 the PCX. The PCX 
submitted Amendment Nos. 1 \3\ and 2 \4\ to the proposed rule change on 
February 13, 2001 and March 14, 2001, respectively. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On February 13, 2001, the PCX submitted a new Form 19b-4, 
which replaces and supersedes the original filing in its entirety 
(``Amendment No. 1'').
    \4\ See letter from Hassan Abedi, Attorney, Regulatory Policy, 
PCX, to Nancy J. Sanow, Assistant Director, Division of Market 
Regulation, Commission, dated March 13, 2001 (``Amendment No. 2''). 
Amendment No. 2 revises proposed PCX Rule 3.8(c) to require the 
Exchange to provide a written response within 10 days to the 
requesting member specifying that a denial or placement of 
limitations or conditions is due to other bona fide business 
considerations that are specifically documented and maintained in 
the minutes of the Exchange's Options Listings Committee.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX is proposing procedures for member organizations to propose 
initial options listing. The text of the proposed rule change is set 
forth below. All language is being added.
* * * * *
Listing Proposals
    3.8. A member organization seeking to propose an option listing in 
the Options Listing Committee (``OLC'') must execute and deposit a 
Listing Request Form in the Options Allocation Box by 11:00 a.m. on a 
daily basis. Listing Request Forms placed in the Options Allocation Box 
after 11:00 a.m. will be considered on the following day. Once the 
request is made the PCX staff will:
    (a) Confirm in writing the underlying issue of the options request 
meets all the requirements set forth in PCX Rule 3.6;
    (b) Present the issue for listing consideration at the next 
scheduled OLC meeting. In making its determination the OLC will apply 
the qualitative and quantitative criteria set forth in Regulatory 
Bulletin Options 01-08; and
    (c) Provide a written response to the requesting member 
organization within ten business days of the date of the request, (i) 
setting forth the basis on which any denial or placement of limitation 
or condition was made; or (ii) indicating that the denial or placement 
of limitation or condition is due to other bona-fide business reasons 
which are specifically documented and maintained in the OLC minutes.
* * * * *

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 PCX 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 PCX proposes to adopt new PCX Rule 3.8 to provide procedures 
for member organizations to propose the listing of options on the 
Exchange.\5\ The proposed rule would require a member organization 
proposing an option listing to the Options Listing Committee (``OLC'') 
to execute and deposit a Listing Request Form in the Options Allocation 
Box by 11:00 a.m. on a daily basis.\6\ Once the request is received, 
the PCX staff would: (i) Confirm that the underlying issue of the 
listing request meets all the requirements set forth in PCX Rule 3.6; 
(ii) present the issue for listing consideration at the next scheduled 
OLC meeting; and (iii) provide a written response, setting forth the 
basis for the denial or placement of limitations or conditions, to the 
requesting member organization within ten business days of the date of 
the request. Regulatory Bulletin Options 01-08 (``RBO 01-08'') sets 
forth in detail the qualitative and quantitative procedures that the 
OLC would follow in making a listing determination.\7\ As

[[Page 19274]]

proposed, RBO 01-08 creates a formal process that: (i) Would disclose 
listing requirements set forth in PCX Rule 3.6; (ii) would specify 
quantitative and qualitative criteria considered by the OLC in 
evaluating listing candidates; (iii) would clarify procedures for 
submission of listing proposals; and (iv) would establish procedures 
for the reporting of OLC decisions to requesting members. The PCX 
believes that the proposed rule and guidelines would provide for a 
reasonable time frame for review and decision making on all listing 
proposals.
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    \5\ As part of a settlement of an enforcement action by the 
Commission, four of the options exchanges, including the PCX, are 
required to adopt rules to codify listing procedures to be carried 
out when a member or member organization requests the exchange to 
list options not currently trading on the exchange. See Order 
Instituting Public Administration Proceeding Pursuant to section 
19(h)(1) of the Securities Exchange Act of 1934, Making Findings and 
Imposing Remedial Sanctions. Securities Exchange Act Release No. 
43268 (September 11, 2000), and Administrative Proceeding File 3-
10282.
    \6\ Proposals received after 11:00 a.m. will be considered on 
the following day.
    \7\ The quantitative factors to be considered by the OLC would 
include: (i) Six-month trading volume in the underlying issue; (ii) 
three-month average daily trading volume; (iii) total shares 
outstanding; and (iv) market capitalization. The qualitative factors 
would be: (i) operating and financial history; (ii) industry and 
competition; (iii) reputation of management; (iv) other significant 
developments that may be expected to materially affect the company 
and its shareholders; and (v) the Exchange's internal competitive 
objectives and system utilization concerns. The Exchange also may 
take notice of other bona-fide business considerations that will be 
documented and maintained in the OLC minutes.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of section 6(b)(5),\9\ in particular, in that it is designed 
to promote just and equitable principles of trade, remove impediments 
to a free and open market and a national market system, and protect 
investors and the public interest by ensuring that all listing 
proposals are properly reviewed.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 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, as 
amended, will impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The PCX 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 PCX 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, as amended, 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 such 
filings will also be available for inspection and copying at the 
principal office of the PCX. All submissions should refer to the File 
No. SR-PCX-00-47 and should be submitted by May 4, 2001.
For the Commission, by the Division of Market Regulation, pursuant to 
delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).

Jonathan G. Katz,
Secretary.
[FR Doc. 01-9114 Filed 4-12-01; 8:45 am]
BILLING CODE 8010-01-M