[Federal Register Volume 67, Number 199 (Tuesday, October 15, 2002)]
[Notices]
[Pages 63720-63722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26058]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46605; File No. SR-PCX-2002-60]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Joint Accounts

October 4, 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 September 23, 2002, the Pacific Exchange, Inc. (``PCX'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which the PCX 
has prepared. The Commission is publishing this notice to solicit 
comments on the proposal from interested persons.
---------------------------------------------------------------------------

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

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX proposes to amend PCX Rule 6.84 in order to allow a market 
maker to participate in more than two joint accounts. The text of the 
proposed rule change is below. The deleted text is in brackets.

Text of the Proposed Rule Change

    Rule 6.84(a). No Market Maker shall, directly or indirectly, hold 
any interest or participate in any joint account for buying or selling 
any option contract or

[[Page 63721]]

related security unless (1) each participant in such joint account is a 
member or member organization of the Exchange, and (2) such joint 
account agreement is filed with (in a form approved by the Exchange) 
and approved by the Exchange. [No Market Maker shall, directly or 
indirectly, concurrently hold any interest or participate in more than 
two joint accounts.]
    (b)-(h)--No change.

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 had received. 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 those statements.

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

1. Purpose
    PCX rules allow market makers to participate in joint accounts. 
Under PCX Rule 6.84, a market maker may not participate or hold an 
interest in more than two joint accounts. This limitation was 
incorporated into the PCX's rules in 1990.\3\ The PCX believes that the 
joint account limitation may have been imposed originally for the 
administrative ease of the PCX, but that it does not currently provide 
any administrative benefit. Furthermore, the PCX believes that the 
limitation was never intended to create, and does not currently 
provide, any regulatory safeguards. For instance, the PCX notes that it 
may track a market maker's activity within a joint account by reference 
to the badge number associated with a given transaction, regardless of 
the number of joint accounts in which the market maker participates.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 28134 (June 19, 
1990), 55 FR 26320 (June 27, 1990).
---------------------------------------------------------------------------

    From time to time, market makers have found it necessary, for 
logistical reasons, to participate in more than two joint accounts. 
Because the PCX believes that there is no benefit to the investing 
public in limiting the number of joint accounts in which a market maker 
participates, the PCX now seeks to remove that limitation and allow 
market makers to enter into as many joint accounts as their business 
requires. The PCX believes that the proposed change is consistent with 
the joint account rules of other options exchanges that do not limit 
the number of joint accounts in which their market makers or 
specialists may enter.\4\
---------------------------------------------------------------------------

    \4\ The PCX notes, for example, that current PCX Rule 6.84(a) is 
virtually identical to Chicago Board Options Exchange (``CBOE'') 
Rule 8.9(c), except that the CBOE rule does not restrict the number 
of joint accounts in which a market maker may participate.
---------------------------------------------------------------------------

2. Basis
    The PCX believes that the proposed rule change is consistent with 
Section 6(b) of the Act \5\ and furthers the objectives of Section 
6(b)(5) of the Act \6\ in that it is designed to facilitate 
transactions in securities, to promote just and equitable principles of 
trade, to foster cooperation and coordination with persons engaged in 
facilitating transactions in securities, and to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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.

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

    The PCX neither solicited nor received written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The PCX submitted a draft of this filing, including the proposed 
new rule text, to the Commission on September 11, 2002 in fulfillment 
of the five-day draft notice period of Rule 19b-4(f)(6).\7\ The PCX has 
further designated that the proposed rule change: (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) does not become operative for 30 days from the date of filing, 
or such shorter time as the Commission may designated if consistent 
with the protection of investors and the public interest. Therefore, 
the proposed rule change has become effective immediately upon filing 
with the Commission pursuant to Section 19(b)(3)(A) of the Act \8\ and 
Rule 19b-4(f)(6) thereunder.\9\ At any time within 60 days after the 
filing of the proposed rule change, the Commission may summarily 
abrogate the 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 furtherance of the purposes of 
the Act.
---------------------------------------------------------------------------

    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \10\ does not 
become operative until 30 days after the date of filing or such shorter 
time as the Commission may designate if such action is consistent with 
the protection of investors and the public interest. The PCX has 
requested that the Commission accelerate the implementation of this 
proposed rule change so that it may take effect before the 30-day 
period specified in Rule 19b-4(f)(6)(iii).\11\ The Commission believes 
that it is consistent with the protection of investors and the public 
interest to waive the 30-day period and to designate that the proposed 
rule change has become operative as of September 23, 2002, the date the 
PCX filed the proposal with the Commission.\12\
---------------------------------------------------------------------------

    \10\ Id.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ The Commission notes that it has considered the proposed 
rule's impact on efficiency, competition, and capital formation for 
the sole purpose of accelerating the operative date of the proposed 
rule change. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

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 the filing will also be 
available for inspection and copying at the principal office of the 
PCX. All submissions should refer to File No.

[[Page 63722]]

SR-PCX-2002-60 and should be submitted by November 5, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-26058 Filed 10-11-02; 8:45 am]
BILLING CODE 8010-01-P