[Federal Register Volume 66, Number 186 (Tuesday, September 25, 2001)]
[Notices]
[Pages 49055-49056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23837]


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SECURITIES AND EXCHANGE COMMISSION

(Release No. 34-44812; File No. SR-PCX-2001-28)


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Pacific Exchange, Inc. Relating to the Composition of the 
Nominating Committee

September 18, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 1, 2001, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change, and amended such 
proposed rule change on September 6, 2001,\3\ as described in Items I, 
II, and III below, which Items have been prepared by the Exchange. 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\ In Amendment No. 1, the PCX clarified its interpretation of 
Article III, Sections 4(a) and 4(b) of the PCX Constitution to 
eliminate the restriction that only public Governors may serve on 
the Nominating Committee. See letter from Cindy L. Sink, Senior 
Attorney, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulations, SEC, dated September 5, 2001 (``Amendment No. 
1'').
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to clarify its interpretation of the PCX 
Constitution to eliminate the restriction that only public Governors 
may serve on the Nominating Committee.

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 the 
sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    On November 16, 2000, the Commission approved the Exchange's 
Constitutional change that required at least one public representative 
serve on the Nominating Committee (``Committee'') and permitted the 
service of Governors on the Committee.\4\ That filing stated that the 
Exchange interpreted the rule proposal to mean that the only Governors 
permitted on the Committee were public Governors. Upon further 
consideration and review, the PCX has determined that this 
interpretation is too narrow.
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    \4\ See Securities Exchange Act Release No. 43576 (November 16, 
2000), 65 FR 71185 (November 29, 2000) (Order approving File No. SR-
PCX-00-09).
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    The composition of the Committee is governed by Article III, 
Sections 4(a) and 4(b) of the PCX Constitution. Section 4(a) provides: 
``At each annual meeting there shall be elected by the membership, by 
ballot, for a term of one

[[Page 49056]]

year, a Nominating Committee of nine persons, one of whom shall be 
nominated as Chair and one of whom shall be nominated as Vice Chair who 
are eligible for election in accordance with Section 4(b) of this 
Article III, none of whom shall be an officer of the Exchange. The 
Nominating Committee shall assume duties as provided in Section 4(d) of 
this Article III.'' Section 4(b) provides: ``The nine members of the 
Nominating Committee eligible to be elected at each annual meeting 
shall be as follows: At least one Committee member shall be a 
representative of the public. At least seven Committee members shall be 
members or office members or office allied members, Equity Trading 
Permit Holders, Equity ASAP Holders or Allied Persons of an ETP firm or 
an Equity ASAP Holder.'' Therefore, eligible PCX governors are not 
restricted from serving on the Committee. The Constitution also permits 
a public Governor to serve as a representative of the public.
    Permitting Governors to serve on the Committee is consistent with 
the PCX Constitutional language, and the basic composition is not 
affected. There must always be at least one public representative on 
the Committee, and there may be up to two. The Exchange maintains the 
flexibility it needs to meet its obligation to have a fair 
representation of Exchange members. Therefore, the Exchange submits 
this clarification to its interpretation of Article III, Section 4(b) 
of the PCX Constitution to eliminate the restriction that only public 
Governors may serve on the Committee.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act \5\ in general, and furthers 
the objectives of Section 6(b)(5) \6\ in particular, in that it is 
designed to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest. The Exchange 
also believes that the proposed rule change, as amended, furthers the 
objectives of Section 6(b)(3) of the Act,\7\ in that it is designed to 
assure a fair representation of Exchange members in the selection of 
the Exchange's Governors.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
    \7\ 15 U.S.C. 78f(b)(3).
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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 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

    The proposed rule change, as amended, has become effective pursuant 
to Section 19(b)(3)(A)(i) of the Act \8\ and subparagraph (f)(1) of 
Rule 19b-4 thereunder \9\ because it constitutes a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule. At any time within 
60 days of the filing of such proposed rule change, as amended, 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 futherance 
of the purposes of the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(i).
    \9\ 17 CFR 240.19-4(f)(1).
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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 Commission, 450 Fifth Street, N.W., Washington, D.C. 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 Section. 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-2001-28 and should 
be submitted by October 16, 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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-23837 Filed 9-24-01; 8:45 am]
BILLING CODE 8010-01-M