[Federal Register Volume 67, Number 83 (Tuesday, April 30, 2002)]
[Notices]
[Pages 21315-21316]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10540]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45793; File No. SR-PCX-2002-11]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. To Limit the Number of Exchange 
Memberships That Any Person, Associated Person, or Group of Associated 
Persons May Own

April 22, 2002.
    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 February 6, 2002, 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 Exchange. The 
Commission is publishing this notice to solicit comments on 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.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to adopt a new rule that would limit to 15% 
the number of Exchange memberships that any person, associated person, 
or group of associated persons may own directly or indirectly, without 
an exemption from the Exchange's Board of Governors (``Board'').
    The text of the proposed rule change appears below. New text is in 
italics.
* * * * *
    Rule 1.21(d) No person, associated person or group of associated 
persons may directly or indirectly beneficially own, or control the 
voting rights of, more than 15% of the number of authorized memberships 
of the Exchange unless expressly authorized by the Board through a two-
thirds majority of those Governors voting at a meeting at which a 
quorum is present, provided that such authorization must be approved by 
not less than a majority of all Governors. In the event that a person, 
associated person or group of associated persons acquires beneficial 
ownership of, or control the voting rights of, memberships in excess of 
this 15% limit as a result of a merger or acquisition of a member firm, 
then the following will apply: (i) such person, associated person or 
group of associated persons will not be entitled to exercise any voting 
rights attached to any memberships in excess of 15% of the number of 
authorized memberships; and (ii) such person, associated person or 
group of associated persons must reduce the number of memberships 
beneficially owned to comply with this Rule within two years.
* * * * *

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

[[Page 21316]]

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 adopt new PCX Rule 1.21(d), which 
would provide that no person, associated person, or group of associated 
persons may directly or indirectly beneficially own, or control the 
voting rights of, more than 15% of the number of authorized memberships 
of the Exchange. However, under the proposed rule change, exceptions to 
the 15% limit are permitted if they are expressly authorized by the 
Exchange's Board through a two-thirds majority of those Governors 
voting at a meeting at which a quorum is present, provided that such 
authorization must be approved by not less than a majority of all 
Governors. The Exchange represents that it currently has 552 authorized 
PCX memberships. Therefore, the seat ownership limit under the proposed 
rule change would be 82.
    The proposed rule change further provides that in the event that a 
person, associated person, or group of associated persons acquires 
beneficial ownership of, or controls the voting rights of, memberships 
in excess of the 15% limit as a result of a merger or acquisition of a 
member firm, then the following will apply: (i) Such person, associated 
person, or group of associated persons will not be entitled to exercise 
any voting rights attached to any memberships in excess of 15% of the 
number of authorized memberships; and (ii) such person, associated 
person, or group of associated persons must reduce the number of 
memberships beneficially owned to comply with this proposed rule within 
two years.
    The Exchange represents that the proposed rule change is intended 
to assure that the Exchange's memberships do not become unduly 
concentrated and thereby subject to domination by a particular member 
or member organization's own interest.
2. Statutory Basis
    The PCX believes that the proposal is consistent with Section 6(b) 
of the Act,\3\ in general, and furthers the objectives of Section 
6(b)(3) of the Act \4\ in particular, in that it is designed to assure 
that the Exchange maintains a fair representation of its members in the 
selection of its directors and administration of its affairs. The 
Exchange further believes that the proposal furthers the objectives of 
Section 6(b)(5) of the Act \5\ in that it is designed to promote just 
and equitable principles of trade and in general, to protect investors 
and the public interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(3).
    \5\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on 
Competition

    The PCX 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

    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

    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 Exchange consents, the Commission will:
    (A) By order approve such 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 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 filing will also be 
available for inspection and copying at the principal office of the 
PCX. All submissions should refer to file number SR-PCX-2002-11 and 
should be submitted by May 21, 2002.

For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-10540 Filed 4-29-02; 8:45 am]
BILLING CODE 8010-01-P