[Federal Register Volume 64, Number 4 (Thursday, January 7, 1999)]
[Notices]
[Pages 1041-1042]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-308]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-40844; File No. SR-BSE-98-07]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Amendment No. 2 to a Proposed Rule
Change by the Boston Stock Exchange, Inc. Relating to Its Specialist
Performance Evaluation Program
December 28, 1998.
I. Introduction
On October 8, 1998, the Boston Stock Exchange, Inc. (``BSE'' 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 amend the depth measure calculations in its
Specialist Performance Evaluation Program (``SPEP'') pilot program and
to seek permanent approval of the program at the expiration of the
pilot on December 31, 1998. The Exchange submitted to the Commission
[[Page 1042]]
Amendment No. 1 to its proposed rule change on November 13, 1998.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Rule 19b-4 filing, SR-BSE-98-07, dated November 6, 1998
(``Amendment No. 1'').
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The proposed rule change and Amendment No. 1 were published for
comment in the Federal Register on December 11, 1998.\4\ On December
17, 1998, the BSE submitted Amendment No. 2 to the proposed rule
change.\5\ This order approves Amendment No. 2, which extends the SPEP
pilot for a six-month period ending on June 30, 1999, or until the
Commission approves the proposal seeking to amend the program and to
make the program permanent, whichever occurs first.
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\4\ Securities Exchange Act Release No. 40746 (Dec. 3, 1998), 63
FR 68490 (Dec. 11, 1998).
\5\ In Amendment No. 2, the Exchange (1) requested an extension
of the SPEP program for a six-month period ending on June 30, 1999,
or until the Commission approves the Exchange's proposal to revise
the SPEP and to make it permanent,whichever occurs first, and (2)
made a technical change to its rule.
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Background
The Exchange regularly evaluates the performance of its specialists
under the SPEP pilot program. Under the SPEP pilot, specialists are
evaluated based on objective measures, such as turnaround time, price
improvements, depth and added depth. Generally, any specialist who
receives a deficient score in one or more objective measures may be
required to attend a meeting with the Performance Improvement Action
Committee or the Market Performance Committee.
The Exchange has submitted a proposal seeking to amend its SPEP
pilot by modifying the two depth measure calculations and the overall
program score. In addition, the Exchange is requesting permanent
approval of the program, which is set to expire on December 31, 1998.
The Commission is currently in the process of reviewing the Exchange's
proposal seeking to amend and permanently approve the SPEP pilot.
II. Description
In the current amendment, the Exchange is proposing to extend the
SPEP pilot for a six-month period ending on June 30, 1999, or until the
Commission approves the proposal seeking to amend the program and have
it approved permanently, whichever occurs first. The proposed rule
language, as amended, follows. Deletions are bracketed.
Chapter XV
Specialists
Specialist Performance Valuation Program
* * * * *
Sec. 17(a) [The Specialist Performance Evaluation Program is a 12-
month pilot program.]
III. Discussion
The Commission finds that the BSE's proposal to extend the SPEP
pilot program until June 30, 1999, or until the Commission approves the
proposal seeking to amend the program and to make the program
permanent, whichever occurs first, is consistent with the requirements
of the Act and the rules and regulation thereunder. Specifically, the
Commission finds that the amendment is consistent with Section 6(b)(5)
of the Act,\6\ which requires that the rules of the Exchange be
designed to promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest. The Commission believes that the proposed six-month
extension of the pilot program should continue to provide necessary
oversight of Exchange specialist while allowing the Commission adequate
time to consider the BSE's proposal seeking to amend its two depth
measure calculations and to make its program permanent.
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\6\ 15 U.S.C. 78f(b)(5).
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The Commission finds good cause for granting the Exchanges' request
for a six-month extension of the SPEP pilot prior to the thirtieth day
after the date of publication of notice of filing thereof in the
Federal Register. Among the obligations imposed upon specialists by the
Exchange, and by the Act and the rules promulgated thereunder, is the
maintenance of fair and orderly markets in their securities. To ensure
that specialists fulfill these obligations, it is important that the
Exchange conduct effective oversight of their performance. The BSE's
SPEP pilot is critical to this oversight. Therefore, the Commission
believes good cause exists to approve the extension of the pilot
program until June 30, 1999, or until the Commission approves the
Exchange's proposal seeking to amend its two depth measure calculation
and to make its program permanent, on an accelerated basis.
Accordingly, the Commission believes that granting accelerated approval
of the requested extension is appropriate and consistent with Sections
6(b)(5) and 19(b)(2) of the Act.\7\
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\7\ 15 U.S.C. 78f(b)(5) and 78s(b)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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 submissions, 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 Room, 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of such filings will also be
available for inspection and copying at the principal offices of the
Exchanges. All submissions should refer to File No. SR-BSE-98-07 and
should be submitted by January 28, 1999.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that Amendment No. 2 to the proposed rule change, SR-BSE-98-07,
which extends the SPEP pilot until June 30, 1999, or until the
Commission approves the proposal seeking to amend the program and to
make the program permanent, whichever occurs first, is approved.\9\
\8\ 15 U.S.C. 78s(b)(2).
\9\ In approving Amendment No. 2, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.303(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-308 Filed 1-6-99; 8:45 am]
BILLING CODE 8010-01-M