[Federal Register Volume 66, Number 128 (Tuesday, July 3, 2001)]
[Notices]
[Page 35312]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16677]



[[Page 35312]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44479; File No. SR-PCX-00-47]


Self-Regulatory Organizations; Order Approving a Proposed Rule 
Change by the Pacific Exchange, Inc. Adopting Formal Procedures for 
Members To Submit Proposals To List Option Classes on the Exchange

June 27, 2001.

I. Introduction

    On December 13, 2000, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') submitted to the Securities and Exchange Commission 
(``Commission''), 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 adopting formal procedures for members to submit 
proposals to list options classes on the Exchange. 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 Federal Register 
published the proposed rule change for comment on April 13, 2001.\5\ 
The Commission received no comments on the proposed rule change. This 
order approves the proposed rule change, as amended.
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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 ten business 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.
    \5\ Securities Exchange Act Release No. 44149 (April 4, 2001), 
66 FR 19273.
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II. Description of Proposal

    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.\6\ The Exchange would 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. The proposed rule change also sets 
forth the qualitative and quantitative procedures that the Exchange's 
Options Listings Committee would follow in making a listing 
determination.
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    \6\ 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 Administrative Proceedings 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).
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\7\ 
Specifically, the Commission believes that the proposed rule change is 
consistent with the section 6(b)(5) \8\ requirements that the rules of 
an exchange be designed to promote just and equitable principles of 
trade, to remove impediments to and perfect the mechanisms of a free 
and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \7\ In approving the proposal, the Commission has considered its 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed rule change will remove 
impediments to and perfect the mechanisms of a free and open market by 
providing formal procedures for members to request the listing of 
options on the Exchange. The proposal would require the Exchange to 
respond in writing within ten business days to requests by members to 
list options. The Commission believes that the proposed procedures and 
time frames set forth in the proposed rule change are reasonable and 
adequately balance the Exchange's need to thoroughly examine proposed 
listings before making its determination with its members' need for a 
prompt and specific response to its listing recommendation.
    In addition, the proposed rule change codifies the factors to be 
considered by the Exchange in determining whether to list a recommended 
option. The Commission believes that the proposed factors represent 
legitimate issues that the Exchange may consider when making a listing 
decision. The Commission notes that if the Exchange denies or places 
conditions or limitations upon a proposed listing, it must include its 
reasons in the letter notifying the member of its decision. The 
Commission believes that this requirement should help to ensure that 
the Exchange relies only upon the factors codified in its rules when 
making a listing decision.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change, as amended (SR-PCX-00-47), is 
approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-16677 Filed 7-2-01; 8:45 am]
BILLING CODE 8010-01-M