[Federal Register Volume 61, Number 49 (Tuesday, March 12, 1996)]
[Notices]
[Pages 10054-10055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5782]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36917; File No. SR-PSE-95-29]
Self-Regulatory Organizations; Pacific Stock Exchange, Inc.;
Order Approving Proposed Rule Change Relating to the Composition and
Duties of the Options Allocation Committee
March 4, 1996.
I. Introduction
On November 15, 1995, the Pacific Stock Exchange, Inc. (``PSE'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``Commission''), pursuant to Section
[[Page 10055]]
19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposal to amend its rules relating to the
composition and duties of the Options Allocation Committee (``OAC'').
The proposed rule change was published for comment in the Federal
Register on December 21, 1995.\3\ No comments were received on the
proposed rule change.
\1\ 15 U.S.C. 78s(b)(1) (1988).
\2\ 17 CFR 240.19b-4 (1994).
\3\ See Securities Exchange Act Release No. 36592 (December 14,
1995), 60 FR 66333.
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II. Description of the Proposal
PSE Rule 11.10(c) describes the duties and composition of the OAC.
The Exchange proposes to make five changes to Rule 11.10(c). First, the
current Rule 11.10(c) requirement that the OAC consist of Floor Brokers
and Market Makers is amended to provide that the OAC shall consist of
Market Makers, Lead Market Makers, Floor Brokers, and/or persons
associated with floor members, office members or office allied
members.\4\
\4\ Cf. PSE Const., Art. IV, Sec. 5(a) (analogous provision for
Equity Allocation Committee). The Exchange interprets the term
``office member'' to include any member who is not a floor member.
Thus, the term ``office member'' denotes those members who work in
an office, or ``upstairs,'' rather than working on a trading floor
as a market maker, floor broker, or specialist. Letter from Michael
D. Pierson, Senior Attorney, Market Regulation, PSE, to Francois
Mazur, Attorney, Office of Market Supervision, Division of Market
Regulation, Commission, dated February 29, 1996.
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Second, Commentary .01 to Rule 11.10(c) currently provides that the
OAC shall be comprised of (i) two Floor Brokers from either the Options
Floor Trading Committee or the Options Listing Committee; (ii) two
Market Makers or Lead Market Makers from either the Options Floor
Trading Committee or the Options Listing Committee; (iii) three at-
large Floor Brokers; and (iv) three at-large Market Makers or Lead
Market Makers. The proposal amends this provision to provide that
attempts shall be made for the OAC to have a composition that includes:
Floor Brokers from either the Options Floor Trading Committee or the
Options Listing Committee; Market Makers or Lead Market Makers from
either the Options Floor Trading Committee or the Options Listing
Committee; at-large Floor Brokers; and at-large Market Makers or Lead
Market Makers.
Third, the proposal eliminates the Commentary .01 limitation that
the OAC include no more than three members of the Options Floor Trading
Committee and no more than three members of the Options Listing
Committee.
Fourth, Rule 11.10(c) currently provides that it shall be the duty
of the OAC to allocate, reallocate and evaluate options issues. The
proposal changes this provision to provide that the OAC shall allocate
and reallocate option issues.
Finally, the current Rule 11.10(c) provision that the OAC is
responsible for monitoring the performances of trading crowds and Lead
Market Makers is changed to provide that the OAC shall be responsible
for evaluating and monitoring the performances of Market Makers,
trading crowds and Lead Market Makers.\5\
\5\ The OAC currently evaluates Market Makers and Lead Market
Makers pursuant to Options Floor Procedure Advice B-13.
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III. Discussion
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, and, in
particular, with Section 6(b)(3) of the Act, in that the proposal
provides for a fair representation of the Exchange's members in the
administration of its affairs, and also with Section 6(b)(5) of the
Act, in that the proposal is designed to protect investors and the
public interest.
The Commission believes that the Exchange's proposal regarding the
composition of the OAC should serve to allow greater flexibility in the
committee selection process while maintaining a committee structure
that broadly represents the Exchange's membership. Thus the proposal
removes specific numerical requirements for the composition of the OAC
while requiring that attempts be made to have a broadly representative
committee. Similarly, removing the restrictions on the number of OAC
members who may belong to certain other committees should serve to
enhance the process of replacing committee members who resign or change
their status relating to floor membership or service on other
committees of the Exchange.
The Commission believes that the provisions of the proposal
relating to the duties of the OAC clarify the existing rules and do not
otherwise change the way business is conducted on the Exchange.
Specifically, the proposal makes clear that it is the duty of the OAC
to allocate and reallocate option issues, not to evaluate them. The
latter is the duty of the Options Listing Committee.\6\ Similarly, the
proposal makes the OAC responsible for evaluating, as well as
monitoring, Market Makers, trading crowds, and Lead Market Makers (and
in so doing adds an explicit reference to Market Makers).
\6\ PSE Const. Art. IV, Sec. 7(b) and Rule 11.10(d) both provide
that it is the duty of the Options Listing Committee to recommend to
the Board of Governors options for listing and delisting on the
Exchange.
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IV. Conslusion
It is therefore ordered, pursuant to Section 19(b) (2) of the
Act,\7\ that the proposed rule change (SR-PSE-95-29) is approved.
\7\ 15 U.S.C. 78s(b)(2) (1988).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\ 17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5782 Filed 3-11-96; 8:45 am]
BILLING CODE 8010-01-M
