[Federal Register Volume 63, Number 111 (Wednesday, June 10, 1998)]
[Notices]
[Pages 31823-31824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15416]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40063; File No. SR-PCX-98-21]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment 1 Thereto by the Pacific Exchange, Inc., Relating
to Fines for Disruptive Action on the Options Floor
June 3, 1998.
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 April 16, 1998, the Pacific Exchange, Inc. (``PCX'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the
Exchange. On May 28, 1998, the Exchange filed Amendment 1 to the
proposal with the Commission.\3\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as amended,
from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment 1 clarifies the purpose section of the filing by
noting that fines over $2,500 are subject to higher reporting
requirements than fines of $2,500 or less. See Letter from Michael
D. Pierson, Senior Attorney, Regulatory Policy, PCX, to Lisa
Henderson, Attorney, SEC, dated May 26, 1998.
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I. Self-Regulatory Organization's Statement of the Term of
Substance of the Proposed Rule Change
PCX is proposing to increase its recommended fines under the Minor
Rule Plan (``MRP'') for disruptive action involving physical contact
between members while on the options trading floor. Proposed new
language is in italics; proposed deleted language is in brackets.
6133 Minor Rule Plan
Rule 10.13(a)-(j)--No change.
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\4\ Rule 19d-1(c)(2) under the Act authorizes national
securities exchanges to adopt minor rule violation plans for the
summary discipline and abbreviated reporting of minor rule
violations by exchange members and member organizations. See
Securities Exchange Act Release No. 21013 (June 1, 1984), 49 FR
23828 (June 8, 1984) (order approving amendments to paragraph (c)(2)
of Rule 19d-1 under the Act). Pursuant to PCX Rule 10.13, the
Exchange may impose a fine on any member or member organization for
any violation of an Exchange rule that has been deemed to be minor
in nature and approved by the Commission for inclusion in the MRP.
PCX Rule 10.13(h)-(j) sets forth the specific Exchange rules deemed
to be minor in nature.
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(k) Minor Rule Plan: Recommended Fine Schedule.
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\5\ As noted in PCX Rule 10.13(e), pursuant to Securities
Exchange Act Release No. 30958, any person or organization found in
violation of a minor rule under the MRP is not required to report
such violation on SEC Form BD, provided that the sanction imposed
consists of a fine not exceeding $2,500 and the sanctioned person or
organization has not sought an adjudication, including a hearing, or
otherwise exhausted the administrative remedies available with
respect to the matter. Accordingly, any fine imposed in excess of
$2,500 will be subject to reporting on SEC Form BD in addition to
the immediate, rather than periodic, reporting requirement of
Section 19(d)(1) of the Act. See Securities Exchange Act Release No.
32080 (January 22, 1992), 57 FR 3452 (noting that fines in excess of
$2,500, assessed under New York Stock Exchange, Inc. (``NYSE'') Rule
476A, are not considered pursuant to the NYSE's minor rule violation
plan and are thus subject to the current reporting requirements of
Section 19(d)(1) of the Act).
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Fines
(i) Options Floor Decorum and --------------------------------------
Minor Trading Rule Violations 1st 2nd 3rd
violation violation violation
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1.-16. No change
17. Disruptive action involving
physician contact while on the
trading floor. (Rule 6.2)....... [$500.00]
1,500.00 [$1,000.00]
3,000.00 [$2,500.00]
5,000.00
18.-34. No change.
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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 Exchange 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 Exchange 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 Exchange is proposing to increase the recommended fines under
the MRP \4\ for disruptive action involving physical contact between
members while on PCX's Options Trading Floor. These fines are currently
set at $500, $1,000 and $2,500 for first, second and third violations,
respectively, during a running two-year period. The Exchange is
proposing to increase these fines at $1,500, $3,000, and $5,000,
respective.\5\ The purpose of the rule change is to deter future
incidents of disruptive conduct involving physical contact. The
Exchange notes that there has been a moderate increase recently in the
number of such cases, and the Exchange intends that the proposed rule
change will serve to reverse that trend.
[[Page 31824]]
2. Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) of the Act,\6\ in general, and furthers the objectives of
Section 6(b)(5),\7\ in particular, in that it is designed to promote
just and equitable principles of trade. In addition, the Exchange
believes that the proposal will serve to promote fair and orderly
markets on the Options Floor and thereby will serve to protect
investors and the public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change 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 rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the date of 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 PCX consents, the Commission will:
(A) By order approve such 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, 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.
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, 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 PCX. All submissions should
refer to File No. SR-PCX-98-21 and should be submitted by July 1, 1998.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-15416 Filed 6-9-98; 8:45 am]
BILLING CODE 8010-01-M
