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Notice

Self-Regulatory Organizations; Notice of Filing of a Proposed Rule Change by the Pacific Exchange, Inc., Relating to Options Trade Reporting

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Information about this document as published in the Federal Register.

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Start Preamble November 1, 2000.

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 August 5, 2000, the Pacific Exchange, Inc. (“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 PCX. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The PCX proposes to amend Exchange Rule 6.69 to require Exchange options transactions to be reported immediately upon execution and no later than 90 seconds following execution of the trade. The PCX also proposes to amend Exchange Rule 10.13 to include Exchange Rule 6.69 in the Exchange's Minor Violation Plan (“Plan”).

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 PCX 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 purpose of the proposed rule change is to require options transactions to be reported within 90 seconds to the Options Price Reporting Authority (“OPRA”), which disseminates trade information to the investing public through vendors. Specifically, proposed Rule 6.69(a) would require all Exchange members and member organization's who are required to report trades either directly to OPRA or to another party responsible for reporting trades to OPRA, to immediately report all trades to the Exchange for disseminations to OPRA within the required 90 second time frame.

Currently, Commentary .01 to Exchange Rule 6.69 states that trade must be immediately reported at the time of execution. The Exchange proposes to require immediate trade reporting, and in any event, no later than 90 seconds following execution. This would serve as a specific time limit for trade participants and should enable the Exchange's Market Surveillance Department and Enforcement Department to monitor for violations of the rule. The Exchange also believes that the proposed rule change should facilitate transparency and help to create an accurate picture of market activity and enable the Exchange to better monitor compliance with the order handling and transparency rules, including limit order protection, priority, and best execution.

The Exchange also proposes to amend Rule 10.13 to include violations of proposed Rule 6.69(a) in the Plan. The Exchange believes that the proposed rule is consistent with and furthers the goals and objectives of the Plan. The Start Printed Page 67031Exchange believes that the proposed fine schedule of $100.00, $250.00 and $500.00 for the first, second, and third violations, respectively, is reasonable and will serve as an effective deterrent of future violations.

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act [3] in general, and furthers the objectives of Section 6(b)(5) [4] in particular, in that it is designed to promote just and equitable principles of trade. The Exchange believes that the proposed rule also furthers the objectives of Section 6(b)(6),[5] in that it is designed to appropriately discipline members who violate the rules of the Exchange.

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

The Exchange did not solicit or receive written comments on the proposed rule change.

III. Date of Effectiveness of the 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 Exchange 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 the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. 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 the filing will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to the File No. SR-PCX-00-27 and should be submitted by November 29, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[6]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

[FR Doc. 00-28651 Filed 11-7-00; 8:45 am]

BILLING CODE 8010-01-M