[Federal Register Volume 60, Number 114 (Wednesday, June 14, 1995)]
[Notices]
[Pages 31333-31334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14537]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35777; File No. SR-PSE-95-10]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 to Proposed Rule Change by the Pacific Stock
Exchange, Incorporated, Relating to its Procedure for Evaluating
Options Trading Crowd Performance
May 30, 1995.
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 7,
1995, 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 Exchange. The
Exchange subsequently filed Amendment No. 1 on May 25, 1995.\1\ The
Commission is publishing this notice to solicit comments on the
proposed rule change and Amendment No. 1 from interested persons.
\1\In Amendment No. 1, the Exchange proposes to amend Rule
6.82(b)(4)(i) to provide that the Lead Market Maker (``LMM'')
Appointment Committee shall review LMM appointments at least semi-
annually. The rule currently provides that the LMM Appointment
Committee must review LMM appointments at least quarterly. See
Letter from Michael D. Pierson, Senior Attorney, Market Regulation,
PSE, to James McHale, Attorney, Division of Market Regulation,
Commission, dated May 23, 1995 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PSE is proposing to change its procedure for evaluating options
trading crowd performance by specifying that floor broker
questionnaires will be distributed semi-annually rather than
quarterly.\2\ The text of the proposed rule change is available at the
Office of the Secretary, PSE and at the Commission.
\2\While PSE's Options Floor Procedure Advice B-13 currently
requires the trading crowd evaluation questionnaire to be
distributed to and completed by the floor brokers on a three-month
periodic basis, the Commission staff understands that the Exchange
began distributing the questionnaire on a semi-annual basis,
beginning with the questionnaire dated October 17, 1994, covering
the six (6) month period between April and September 1994. Telephone
conversation between Michael D. Pierson, Senior Attorney, Market
Regulation, PSE, and James T. McHale, Staff Attorney, Division of
Market Regulation, Commission, on May 9, 1995.
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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 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
Options Floor Procedure Advice (``OFPA'') B-13 requires the Options
Allocation Committee (``Committee'') of the Exchange to evaluate
periodically the options trading crowds\3\ to determine whether each
has fulfilled performance standards relating to, among other things,
quality of markets, competition among market makers, observance of
ethical standards, and administrative factors.\4\ In conducting its
evaluation, the Committee may consider any relevant information,
including but not limited to, the results of a trading crowd evaluation
questionnaire. The questionnaires are distributed to and completed by
floor brokers on the Options Trading Floor on
[[Page 31334]]
a ``three-month periodic basis'' pursuant to OFPA B-13.
\3\Pursuant to Rule 6.82, the program is also used to conduct
evaluations of LMMs on the Options Trading Floor. The Exchange,
through Amendment No. 1, also proposes to amend Rule 6.82(b)(4)(i)
to require the LMM Appointment Committee to review LMM appointments
on a semi-annual basis. See Amendment No. 1, supra note 1.
\4\The Commission approved the Exchange's Options Trading Crowd
Performance Evaluation Pilot Program on a permanent basis on
December 30, 1993. See Exchange Act Release No. 33407, 59 FR 1043
(January 7, 1994).
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The Exchange is proposing to amend OFPA B-13 to provide that
trading crowds will be evaluated by questionnaire semi-annually rather
than quarterly. At this time, the Exchange believes that floor brokers
who respond to the surveys will pay greater attention and care in
responding if the evaluation were conducted on a semi-annual basis.
This is based on the Exchange's belief that quarterly evaluations are
overly repetitive. Consequently, the Exchange believes that the
proposed change would result in better measurements of trading crowd
and Lead Market Maker performance. The Exchange further believes that
the proposed change would result in a better allocation of Exchange
resources, and that it will serve to enhance the Options Trading Crowd
Evaluation Program.
2. Statutory Basis
The Exchange believes the proposed rule change 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 prevent
fraudulent and manipulative acts and practices and to promote just and
equitable principles of trade, and is not designed to permit unfair
discrimination between customers, issuers, brokers and dealers.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes the proposed rule change will impose no
burden on competition.
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 on
the proposed rule change.
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. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 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-95-10 and should be
submitted by July 5, 1995.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
\5\17 CFR 200.30-3(a)(12) (1994).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-14537 Filed 6-13-95; 8:45 am]
BILLING CODE 8010-01-M
