[Federal Register Volume 60, Number 75 (Wednesday, April 19, 1995)]
[Notices]
[Pages 19618-19619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9669]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35600; File No. SR-PSE-95-06]
Self-Regulatory Organizations; Pacific Stock Exchange, Inc.;
Order Granting Approval to Proposed Rule Change Relating to New
Organizational Structures
April 13, 1995.
On February 21, 1995, the Pacific Stock Exchange, Inc. (``PSE'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``SEC'' or ``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 to amend Articles V and VIII of
its Constitution to allow for the admission of entities with new
organizational structures as member organizations.
\1\15 U.S.C. 78s(b)(1).
\2\17 CFR 240.19b-4.
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The proposed rule change was published for comment in Securities
Exchange Act Release No. 35443 (March 6, 1995), 60 FR 13196 (March 10,
1995). No comments were received on the proposal. This order approves
the proposed rule change.
I. Proposal
The PSE Constitution currently allows members of the Exchange to
confer the privileges of their memberships on a firm which may be
either a partnership or a corporation. The Exchange is proposing to
amend Article VIII, Section 1(a) of its Constitution to provide that
the Exchange may, in its discretion, and on such terms as the Exchange
may prescribe, approve as a member firm, entities that have
characteristics essentially similar to corporations, partnerships, or
both.\3\ In addition, the Exchange is proposing to amend Article V,
Sections 4, 5, and 7 of the PSE Constitution (definitions of ``member
firm,'' ``member organization,'' and ``associated person'') to be
consistent with the proposed change to Article VIII, Section 1(a). The
Exchange is proposing to add the phrase ``or other organization'' to
the definitions of ``member firm'' and ``member organization'' and to
add the phrases ``member of a Limited Liability Company'' and ``trustee
of a business trust'' to the definition of ``associated person.'' These
amendments would permit the Exchange to approve business trusts,
limited liability companies and other organizational structures as
member organizations so long as the characteristics of the entity in
question are essentially similar to those of corporations or
partnerships.
\3\The Exchange stated that non-corporate or partnership
entities would have to be structured in such a format that would
qualify as a broker or dealer registered with the SEC pursuant to
the Act, since this is a prerequisite to becoming an Exchange member
organization. Telephone conversation between Michael D. Pierson,
Senior Attorney, PSE, and Elisa Metzger, Senior Counsel, SEC, on
March 3, 1995.
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The Exchange believes that the rule change is consistent with
Section 6(b) of the Exchange Act, in general, and Section 6(b)(5) in
particular, in that it is designed to promote just and equitable
principles of trade and to protect investors and the public interest.
II. 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 the requirements of Sections 6(b).\4\ Specifically,
the Commission believes the amendment is consistent with the Section
6(b)(2)\5\ of the Act, which requires the rules of an exchange, subject
to the provisions of Section 6(c) of the Act,\6\ to ensure that any
registered broker or dealer or natural person associated with a
registered broker or dealer may become a member of the exchange and any
person may become associated with a member thereof.
\4\15 U.S.C. 78f(b).
\5\15 U.S.C. 78f(b)(2).
\6\15 U.S.C. 78f(c).
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The PSE Constitution currently allows members of the Exchange to
confer the privileges of their membership on a firm which may be either
a partnership or a corporation. The amendments would enable entities
with new organizational structures similar to corporations and
partnerships to become Exchange members and be included in the
Exchange's definition of a member organization. As in the case of a
partnership or corporation applying for [[Page 19619]] membership, the
new entity will be subject to all other requirements for membership
approval.
The Commission believes that the amendments to Articles V and VIII
of the PSE Constitution reasonably balance the Exchange's interest in
having the flexibility to approve entities with new organizational
structures for Exchange membership, with the regulatory interests in
protecting the financial and structural integrity of a member
organization. For example, although the amendments permit the Exchange
to approve business trusts, limited liability companies, or other
organizational structures with characteristics of corporations or
partnerships as member organizations, the PSE will review each Exchange
member organization application on a case-by-case basis, and prior to
approving any such organization for membership, the Exchange must be
satisfied that: (1) the Exchange would legally have appropriate
jurisdiction over such an entity; and (2) the permanency of the
entity's capital is consistent with that required of other member
organizations.
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\7\ that the proposed rule change (SR-PSE-95-06) is approved.
\7\15 U.S.C. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
\8\17 CFR 200.30-3(1)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-9669 Filed 4-18-95; 8:45 am]
BILLING CODE 8010-01-M
