[Federal Register Volume 59, Number 76 (Wednesday, April 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9444]
[[Page Unknown]]
[Federal Register: April 20, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33904; File No. SR-PSE-93-08]
Self-Regulatory Organizations; Pacific Stock Exchange; Notice of
Filing of Amendment No. 1 to a Proposed Rule Change Relating to
Amendment to its Rules Governing Competing Specialists
April 13, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April 8,
1994, the Pacific Stock Exchange, Inc. (``PSE'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') Amendment
No. 1 as described in Items I, II and III below. The proposed rule
change was published for comment in Securities Exchange Act Release No.
32651 (July 16, 1993), 58 FR 40679 (July 29, 1993). No comments were
received on the proposal. The Commission is publishing this notice to
solicit comments on the Amendment from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PSE is proposing to adopt procedures for its proposed competing
specialist program. The Amendment extends the PSE's official policies
relating to circuit breakers, previously approved by the Commission,\1\
to Competing Specialists. The Amendment also outlines the procedures
for registration, withdrawal, and participation in the competing
specialist program. The text of this portion of the proposed Amendment
is as follows:
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\1\Securities Exchange Act Release No. 26368 (December 16,
1988), 53 FR 51942. See also Securities Exchange Act Release No.
27370 (October 23, 1989), 54 FR 43881, at n.5.
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Pacific Stock Exchange, Inc.; Procedures for Competing Specialists
The following are procedures for the Competing Specialist Pilot
Program.
1. Registered Specialists are not eligible to act as Competing
Specialists.
2. Applications to compete must be directed to the Equity Floor
Trading Committee in writing and must list in order of preference the
stock(s) in which the applicant intends to compete. The Equity Floor
Trading Committee will consider the following in reviewing an
application:
financial capability
adequacy of staffing on the Floor
existence of adequate Chinese Wall Procedures at the
applicant firm
agreement of both Registered Specialists to allow trading
of specific issues by a Competing Specialist
3. All applicants must be registered as members with the Exchange
and must meet the net capital requirements pursuant to SEC Rule 15c3-1
(effective April 1, 1994) and capital requirements set forth in Rule
2.2(b) of the Rules of the Exchange, and conform to all other
performance requirements and standards set forth in the Rules of the
Exchange. All applicants who control, are controlled by, or are under
common control with another person engaged in a securities or related
business shall have and maintain appropriate Chinese Wall procedures as
approved by a self-regulatory organization. A competing specialist will
be subject to all the rules and policies applicable to a regular
specialist, unless otherwise indicated.\2\
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\2\The PSE has submitted a Chinese Wall filing for Competing
Specialists which is currently under review (SR-PSE-93-36).
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4. All applicant organizations, existing or newly created, must
satisfy the Equity Floor Trading Committee that they have sufficient
staffing to enable them to fulfill the functions of a specialist in all
of the stocks in which the applicant will be registered as a Competing
Specialist.
5. Order flow not specifically designated for a Competing
Specialist must be routed to either Registered Specialist. Competing
Specialists shall not make any payment for order flow that is traded on
the PSE on a Competing Specialist basis.
6. In a competitive situation, if the Competing Specialist
organization that received approval to compete with the Registered
Specialist desires to terminate the competition by requesting that it
be relieved of the stock that is the subject of the competition, it
should so notify the Equity Floor Trading Committee at least 3 business
days prior to the desired effective date of such withdrawal, except in
those situations when such notice is not practicable.
7. Any Competing Specialist who withdraws his/her registration in a
stock will be barred from applying to compete in that same stock for a
period of ninety (90) days following the effective date of withdrawal.
8. Notwithstanding the existence of Competing Specialist
situations, there is only one Exchange market in a security subject to
competition. The Registered Specialist (ITS Coordinator) will be
responsible for updating quotations; thus all competitors must
communicate their markets to the ITS Coordinator and be responsible for
their portion of the disseminated bid and/or offer. Also, competitors
must cooperate with the Registered Specialist regarding openings and
reopenings to ensure that they are unitary.
9. Limit orders entrusted to the Competing Specialist are to be
represented and executed strictly according to time priority as to
receipt of the order in accordance with the Exchange rules.
10. Competing Specialists must keep the Registered Specialists
informed about the full size of any executable ``all or none'' orders
in their possession since all-or-none orders cannot be represented in
the disseminated quote. The Competing Specialist is expected to
represent such orders on a ``best efforts'' basis to ensure the
execution of the entire order at a single price or prices, or not at
all.
11. The registration of any Competing Specialist may be suspended
or terminated by the Equity Floor Trading Committee upon a
determination of any substantial or continued failure by such Competing
Specialist to engage in dealing in accordance with the Constitution and
Rules of the Exchange.
12. The Exchange shall establish an effective date for competition
to commence for a one-year pilot program. Since the Exchange cannot
know what the impact of competition will be on its marketplace, it will
limit competition during the pilot phase as follows:
a. The total number of stocks in which competition will be
permitted shall initially be limited to ten per applicant firm, or as
determined by the Board of Governors.
b. No applicant firm will have more than one Competing Specialist.
c. The number of Competing Specialists will be limited to two on
each Equity Floor.
d. The number of competitors in any given stock will be limited to
three (two Registered Specialists and one Competing Specialist).
e. During the pilot there will be a quarterly review of the
program, or upon request by a Registered Specialist in a specific
Competing Specialist issue.
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
The purpose of the proposed Amendment is to supplement the initial
Competing Specialists filing with specific procedures and guidelines,
as requested by the Commission staff.
2. Statutory Basis
The proposed Amendment is consistent with section 6(b) of the Act,
in general, and furthers the objectives of 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.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed Amendment 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 Amendment were neither solicited
nor received.
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 NW., Washington, DC 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. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street NW.,
Washington, DC 20549. Copies of such filing will also be available for
inspection and copying at the principal office of the PSE. All
submissions should refer to File No. SR-PSE-93-08 and should be
submitted by May 11, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-9444 Filed 4-19-94; 8:45 am]
BILLING CODE 8010-01-M
