[Federal Register Volume 66, Number 228 (Tuesday, November 27, 2001)]
[Notices]
[Pages 59281-59282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29405]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45080; File No. SR-PCX-2001-24]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change Relating to Synchronization 
of Member Organization Business Clocks

November 19, 2001.
    On June 18, 2001, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with 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 requiring all PCX member organization business 
clocks, used for purposes of recording order or trade data to the 
Exchange, to be synchronized to a single time designated by the PCX, 
and that member organizations adopt those procedures as may be 
necessary to maintain such synchronization during each trading day.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    The proposed rule change was published for comment in the Federal

[[Page 59282]]

Register on October 18, 2001.\3\ The Commission received no comments on 
the proposal.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 44922 (October 11, 
2001), 66 FR 52954.
---------------------------------------------------------------------------

    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 \4\ and, in 
particular, the requirements of Section 6 of the Act \5\ and the rules 
and regulations thereunder. The Commission finds specifically that the 
proposed rule change is consistent with Section 6(b)(5) \6\ because it 
is designed to prevent fraudulent and manipulative acts and practices, 
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.
---------------------------------------------------------------------------

    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f.
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that it has previously supported a move toward 
industry-wide synchronization of clocks.\7\ The Commission further 
notes that the PCX has the regulatory responsibility to design and 
implement an audit trail sufficient to enable the Exchange to 
reconstruct markets promptly, conduct efficient surveillance, and 
enforce its rules.\8\ The Commission believes that the reliability and 
usefulness of the Exchange's audit trail information should be enhanced 
by the synchronization of its member organizations' business clocks. In 
addition, synchronization will be important in evaluating members' 
compliance with the rules of the Exchange and the Act, including best 
execution obligations, firm quote rules, and prohibitions on 
frontrunning customer orders.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 39279 (March 6, 
1998), 63 FR 12559 (March 13, 1998) (File No. SR-NASD-97-56) (Order 
approving the National Association of Securities Dealers' proposed 
audit trail system).
    \8\ See In the Matter of Certain Activities of Options 
Exchanges, Securities Exchange Act Release No. 37538 (September 11, 
2000), Administrative Proceeding File No. 3-10282.
---------------------------------------------------------------------------

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (File No. SR-PCX-2001-24) be, and 
it hereby is, approved.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
---------------------------------------------------------------------------

    \10\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29405 Filed 11-26-01; 8:45 am]
BILLING CODE 8010-01-M