[Federal Register Volume 63, Number 93 (Thursday, May 14, 1998)]
[Notices]
[Pages 26834-26835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-12857]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39976; File No. SR-PCX-98-22]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc.,
Relating to Rule Changes for Specialist Performance Evaluations
May 8, 1998.
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
29, 1998,\1\ the Pacific Exchange Incorporated (``PCX'' 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 self-regulatory
organization. The Exchange has designated the proposed rule change as
constituting a ``non-controversial'' rule change under paragraph (e)(6)
of Rule 19b-4 under the Act which renders the proposal effective upon
receipt of this filing by the Commission.\2\ The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
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\1\ On May 5, 1998, the Exchange filed Amendment No. 1,
technical in nature, to the proposed rule change, the substance of
which is incorporated into the notice. See letter from Jeffrey S.
Norris, Manager, Regulatory Development and Oversight, PCX, to
Sharon M. Lawson, Senior Special Counsel, Market Regulation,
Commission, dated May 4, 1998 (``Amendment No. 1'').
\2\ The Exchange has represented that this proposed rule change:
(i) will not significantly affect the protection of investors or the
public interest; (ii) will not impose any significant burden on
competition; and (iii) will not become operative for 30 days after
the date of this filing. The Exchange also has provided at least
five business days' notice to the Commission of its intent to file
this proposed rule change, as required by Rule 19b-4(e)(6) under the
Act.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
PCX is proposing to modify Rule 5.36(d), Commentary .03 and Rule
5.37 to codify previously approved changes to the Exchange's Specialist
Evaluation
[[Page 26835]]
Program and to modify language regarding the imposition of restrictions
and the procedures on certain specialists. The text of the proposed
rule change is available at the Office of the Secretary, PCX, and at
the Commission.
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
On December 22, 1997, the Commission approved a one-year extension
of the Exchange's pilot program for the evaluation of Equity
specialists.\3\ The filing established an overall score and individual
passing scores for specialists, replaced the ``Bettering the Quote''
criterion with ``Price Improvement,'' and lowered the weighting of the
``Specialist Evaluation Questionnaire'' criterion from 15% to 10% so
that Price Improvement could be given a weight of 10%. The Commission
stated in footnote 14 of the Approval Release that the PCX intended to
file changes to its rules to reflect these modifications. This filing
would codify those changes.
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\3\ See Securities Exchange Act Release No. 39477 (December 22,
1997), 62 FR 68334 (December 30, 1997) (``Approval Release'').
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In addition, the proposed rule change clarifies the language
regarding the applicability of restrictions on specialists who fail to
obtain an overall or individual passing score minimum. The following
are examples of the language changes: mitigating circumstances language
was taken out of the rule and language was added to indicate that
decisions will now be done on a case-by-case basis; the language
regarding the formal and informal meeting process was made clear; and
other technical changes were made. In addition, rule language that had
made it mandatory for the Equity Allocation Committee (``EAC'') to
apply restrictions to specialists in the bottom 10% was eliminated
because the Exchange believes it was necessary due to the other changes
to the Specialist Evaluation Performance Program establishing an
overall passing score and individual passing scores. However, the
Exchange kept the discretion to look at specialists that ranked in the
bottom 10% in order to have the ability to review specialists that
continually fall in the bottom 10% even though they passed the other
standards. Changes were made that now give discretion to the Equity
Allocation Committee to decide: (1) whether to meet with the
specialists who are ranked in the bottom 10% of their respective
trading floors; and (2) whether restrictions should be imposed if the
EAC does meet with the specialists in the bottom 10%.
The Exchange intends to file with the Commission by October 30,
1998, a proposal to extend the pilot beyond January 1, 1999, as well as
a report describing its experience with the pilot.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
Section 6(b) \4\ of the Act, in general, and furthers the objectives of
Section 6(b)(5) of the Act,\5\ in particular, in that it is designated
to promote just and equitable principles of trade.
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\4\ 15 U.S.C. 78f(b).
\5\ 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.
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
This proposed rule change has been filed by the Exchange as a
``noncontroversial'' rule change pursuant to paragraph (e)(6) of Rule
19b-4.\6\ Consequently, because the proposed rule change: (1) does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) does not become operative until 30 days after the date of
filing, and the Exchange provided the Commission written notice of its
intent to file the proposed rule change at least five days prior to the
filing date, it has become effective pursuant to Section 19(b)(3)(A) of
the Act \7\ and subpararaph (e)(6) of Rule 19b-4 thereunder.
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\6\ 17 CFR 240.19b-4(e)(6).
\7\ 15 U.S.C. 78s(b)(3)(A).
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At any time within 60 days of the filing of such proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
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, 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 in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to File No. SR-PCX-98-22 and
should be submitted by June 4, 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. 98-12857 Filed 5-13-98; 8:45 am]
BILLING CODE 8010-01-M