97-3624. Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change by the Pacific Stock Exchange Incorporated Relating to the Limitation of Liability in Connection With Indexes on Which Options Are Listed or Traded on the Exchange  

  • [Federal Register Volume 62, Number 30 (Thursday, February 13, 1997)]
    [Notices]
    [Pages 6825-6826]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-3624]
    
    
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    SECURITIES AND EXCHANGE COMMISSION
    [Release No. 34-38253; File No. SR-PSE-97-01]
    
    
    Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
    Change by the Pacific Stock Exchange Incorporated Relating to the 
    Limitation of Liability in Connection With Indexes on Which Options Are 
    Listed or Traded on the Exchange
    
    February 6, 1997.
        Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
    (``Act''),\1\ notice is hereby given that on January 13, 1997, the 
    Pacific Stock Exchange Incorporated (``PSE'' 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 self-regulatory organization. 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).
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    I. Self-Regulatory Organization's Statement of the Terms of Substance 
    of the Proposed Rule Change
    
        The Exchange is proposing to modify PSE Rule 7.13, which relates to 
    the limitation of liability of the PSE in connection with indexes on 
    which options are listed or traded on the Exchange. The text of the 
    proposed rule change is available at the Exchange and at the 
    Commission.
    
    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 self-regulatory organization 
    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 self-regulatory organization 
    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
        PSE Rule 7.13 currently provides that the Exchange shall have no 
    liability for damages, claims, losses or expenses caused by any errors, 
    omissions or delays in calculating or disseminating the index value. 
    The Exchange now proposes to expand this provision in several respects. 
    First, the Exchange proposes to adopt new subsection (a), which will 
    provide that neither the Exchange, any affiliate, nor any Index 
    Licensor or Administrator shall have any liability for any loss, 
    damages, claim, or expense arising from or occasioned by any 
    inaccuracy, error, or delay in, or omission of or from, (i) any index 
    and basket information or (ii) the collection, calculation, 
    compilation, maintenance, reporting or dissemination of any index or 
    any index and basket information, resulting either from any negligent 
    act or omission by the Exchange, any affiliate or any Index Licensor or 
    Administrator or from any act, condition or cause beyond the reasonable 
    control of the Exchange, any affiliate or any Index Licensor or 
    Administrator, including, but not limited to, flood, extraordinary 
    weather conditions; earthquake or other act of God, fire, war, 
    insurrection, riot, labor dispute, accident, action of government, 
    communications or power failure, or equipment or software malfunction.
        The Exchange also proposes to adopt new subsection (b), which 
    states that neither the Exchange, any affiliate, nor any Index Licensor 
    or Administrator makes any express or implied warranty as to results 
    that any person or party may obtain from using (i) any basket, (ii) the 
    index that is the basis for determining a basket's component
    
    [[Page 6826]]
    
    stocks, or (iii) any index and basket information, for trading or any 
    other purpose. It further states that the Exchange, its affiliates, 
    Index Licensors, and Administrators make no express or implied 
    warranties and disclaim all warranties of merchantability or fitness 
    for a particular purpose or use, with respect to any such basket, 
    index, or information.
        The Exchange also proposes to adopt new Commentary .01 to PSE Rule 
    7.13. This Commentary would provide that, for the purposes of PSE Rule 
    7.13, ``Index Licensor or (and) Administrator'' includes any person 
    who: (a) licenses to the Exchange the right to use (i) an index that is 
    the basis for determining the inclusion and relative representation of 
    a basket's component stocks or (ii) any trademark or service mark 
    associated with such an index; (b) collects, calculates, compiles, 
    reports and/or maintains such an index, or index and basket information 
    relating to such an index; (c) provides facilities for the 
    dissemination of index and basket information; and/or (d) is 
    responsible for any of the activities described above.
        In addition, the Exchange proposes to adopt new Commentary .02 to 
    PSE Rule 7.13, which would provide that, for the purposes of PSE Rule 
    7.13, ``index and basket information'' includes (a) information 
    relating to the inclusion and relative representation of stocks in an 
    index from which a basket is derived, such an index's values, a 
    basket's component stocks, the weighted summation of the bids or offers 
    of a basket's component stocks, and basket and component stock last 
    sale and quotation information and (b) other information relating to a 
    basket or its index.
        The purpose of the rule change proposal is to clarify existing PSE 
    Rule 7.13 and to expand it with regard to potential Exchange liability 
    and with regard to Index Licensors and Administrators. The Exchange 
    notes that the text of proposed PSE Rule 7.13 and Commentaries .01 and 
    .02 is substantially similar to New York Stock Exchange Rule 813.
    2. Statutory Basis
        The Exchange believes the proposed rule change is consistent with 
    Section 6(b) \2\ of the Act in general and furthers the objectives of 
    Section 6(b)(5) \3\ in particular in that it is designed to facilitate 
    transactions in securities and to promote just and equitable principles 
    of trade.
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        \2\ 15 U.S.C. 78f(b).
        \3\ 15 U.S.C. 78f(b)(5).
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    B. Self-Regulatory Organization's Statement on Burden on Competition
    
        The Exchange believes the proposed rule change will impose no 
    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
    
        The Exchange has neither solicited nor received written comments.
    
    III. Date of Effectiveness of the Proposed Rule Change and Timing for 
    Commission Action
    
        Within 35 days of the 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 self-regulatory organization consents, the Commission will:
        (A) by order approve the 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. 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. 
    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. Sec. 552, will be available for inspection and copying at 
    the Commission's Public Reference Section, 450 Fifth Street, N.W., 
    Washington, D.C. 10549. Also, copies of such filing will be available 
    for inspection and copying at the principal office of the PSE. All 
    submissions should refer to File No. SR-PSE-97-01 and should be 
    submitted by March 6, 1997.
    
        For the Commission, by the Division of Market Regulation, 
    pursuant to delegated authority.\4\
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        \4\ 17 CFR 200.30-3(a)(12).
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    Margaret H. McFarland,
    Deputy Secretary.
    [FR Doc. 97-3624 Filed 2-12-97; 8:45 am]
    BILLING CODE 8010-01-M
    
    
    

Document Information

Published:
02/13/1997
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
97-3624
Pages:
6825-6826 (2 pages)
Docket Numbers:
Release No. 34-38253, File No. SR-PSE-97-01
PDF File:
97-3624.pdf