[Federal Register Volume 62, Number 128 (Thursday, July 3, 1997)]
[Notices]
[Page 36087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17469]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38780; File No. SR-PCX-97-15]
Self-Regulatory Organizations; Pacific Stock Exchange
Incorporated; Order Granting Approval to Proposed Rule Change Relating
to Trading Differentials for Equity Securities
June 26, 1997.
On May 5, 1997, the Pacific Exchange, Inc. (``PCX'' or
``Exchange'') submitted to the Securities and Exchange Commission
(``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 adopt a procedure that allows the Exchange to
establish trading differentials on an expedited basis.
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\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 the Federal
Register, and no comments were received.\3\ This order approves the
proposal.\4\
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\3\ Securities Exchange Act Release No. 38580 (May 7, 1997), 62
FR 26605 (May 14, 1997).
\4\ The Commission previously granted temporary accelerated
approval to the procedures described herein. Securities Exchange Act
Release No. 38575 (May 6, 1997), 62 FR 16606 (May 14, 1997) (File
No. SR-PCX-97-16).
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PCX Rule 5.3(b) currently provides that, unless specifically ruled
otherwise, the trading differentials on stocks shall be as follows: On
stocks other than those traded on the New York Stock Exchange
(``NYSE'') or American Stock Exchange (``Amex''): if the selling price
is below \1/2\ of $1, the trading differential is \1/32\; if the
selling price is \1/2\ of $1 but under $5, the trading differential is
\1/16\; and if the selling price is $5 and above, the trading
differential is \1/8\. This rule further provides that on stocks also
traded on the NYSE or the Amex, the trading differentials shall be the
same as those prescribed by such exchanges.
The Exchange is proposing to establish a procedure whereby the
Exchange may determine the trading differentials for equity securities
traded on the Exchange. The Exchange is proposing this change in order
to add flexibility, so that it can change its trading differentials on
an immediate basis.
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 Section 6 and Section 11A of the
Act.\5\
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\5\ 15 U.S.C. 78f(b) and 78k-1. In approving this rule change,
the Commission notes that it has considered the proposal's impact on
efficiency, competition, and capital formation, consistent with
Section 3 of the Act. Id. Sec. 78c(f).
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There has been a movement within the industry to reduce the minimum
trading and quotation increments imposed by the various self-regulatory
organizations (``SROs''). The NYSE, The Nasdaq Stock Market
(``Nasdaq''), and the Amex have recently reduced their minimum
increments.\6\ In addition, several third market makers have begun
quoting securities in increments smaller than the primary markets. The
proposed rule change will allow the PCX the flexibility it needs to
address this development and remain competitive with these markets.
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\6\ Securities Exchange Act Release No. 38744 (June 18, 1997),
62 FR 34334 (June 25, 1997) (granting temporary accelerated approval
to an NYSE proposal to replace eighths with sixteenths as the
minimum trading increment for NYSE-listed securities); Securities
Exchange Act Release No. 38571 (May 5, 1997), 62 FR 25682 (May 9,
1997) (approving an Amex proposal to reduce the minimum trading
increment from \1/8\ to \1/16\ for Amex-listed equity securities);
Securities Exchange Act Release No. 38678 (May 27, 1997), 62 FR
30363 (June 6, 1997) (approving a proposed rule change by Nasdaq to
reduce the minimum quotation increment from \1/8\ to \1/16\ for
Nasdaq-listed securities).
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Nevertheless, the Commission notes that any further change in the
minimum increments constitutes (1) a change in a stated policy,
practice, or interpretation with respect to the meaning,
administration, or enforcement of an existing rule of the PCX, or (2) a
change in an existing order-entry or trading system of an SRO, or (3)
both. Therefore, the Exchange is still obligated to file such proposed
changes with the Commission.\7\
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\7\ These changes, however, may become effective upon filing if
they meet certain statutory requirements. See 15 U.S.C.
78s(b)(3)(A)(i) and 17 CFR 240.19b-4(e).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-PCX-97-15) is approved.
\8\ Id. Sec. 78s(b)(2).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-17469 Filed 7-2-97; 8:45 am]
BILLING CODE 8010-01-M