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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 to the Proposed Rule Change by the Pacific Exchange, Inc. Relating to Equity Housekeeping Amendments

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Start Preamble November 7, 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 October 24, 2000, the Pacific Exchange, Inc. (“PCX” or “Exchange”), on behalf of its wholly-owned subsidiary, PCX Equities, Inc. (“PCXE”), filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the PCX. On November 2, 2000, the PCX submitted Amendment No. 1 to the proposed rule change.[3] The Commission is publishing this notice to solicit comments on the proposed rule change and Amendment No. 1 to the proposed rule change from interested persons.

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

The Exchange proposes to make various housekeeping and technical changes to certain previously approved PCX rules by making minor conforming changes to the existing language in order to incorporate those changes into the PCXE rules. 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 Exchange 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 Exchange is proposing to make the following changes below to incorporate previously approved changes to the rules of the PCX into the PCXE rules.[4] Specifically, the Exchange is proposing to apply the PCX rule language to ETP Holders, Equity ASAP Holders, and ETP Firms by incorporating such rule language into the PCXE rules.[5]

a. PCXE Rule 2—Equity Trading Permits. Mandatory Decimal Price Testing—The Exchange proposes to add PCXE Rule 2.25, based upon PCX Rule 1.15(b).[6] Minor conforming changes Start Printed Page 69110have been made to existing language of the PCX Rule in order to incorporate it into the PCXE rules.

b. PCXE Rule 7—Equities Trading—Off-Board Trading Restrictions. Cabinet Dealings—The Exchange proposes to amend PCXE Rule 7.20(a), formerly PCX Rule 5.5(b), to eliminate the sentence “Securities placed in the CABINET System, until removed, may be traded off the Corporation without compliance with Rule 7.49(b).” The SEC previously approved the removal of this sentence from PCX Rule 5.5(b).[7] The Exchange proposes to eliminate the sentence in order reflect this change in PCXE Rule 7.20(a). Over the Counter Execution of Equity Securities Transactions—The Exchange proposes to eliminate PCXE Rule 7.49(a)-(e), formerly PCX Rules 5.43, 5.44, 5.46, 5.48, and 5.49.[8]

c. PCXE Rule 7—Equity Trading—Trading Differentials. Trading Differentials—The Exchange proposes to amend PCXE Rule 7.10(a), formerly PCX Rule 5.3(b), by adding Commentary .04.[9] The Exchange also proposes to add the words “Nasdaq-100 Shares” to Commentary .03.[10]

PCX Equities, Inc. Application of the OptiMark System—The Exchange proposes to amend PCXE Rule 7.71(a), formerly PCX Rule 15.1, by adding the phrase “provided, however, that Orders may be generated from central processing of the profiles designated for the midpoint pricing service by the OptiMark System in conformance with the trading differential in Rule 7.10(a), Commentary .04.” [11]

d. PCXE Rule 9—Conducting Business with the Public. Advertisements, Market Letters and Sales Literature Relating to Options—The Exchange proposes to amend the language in paragraphs (E)-(G) of Commentary .03 to PCXE Rule 9.28(e), adapted from PCX Rule 9.28.[12]

3. PCXE Rule 5—Listings. Financial Reports and Related Notices (EDGAR Rule Filing)—The Exchange proposes to amend PCXE Rule 5.3(i)(1)(i), formerly PCX Rule 3.3(t)(1)(i), by adding Commentary .04.[13]

f. PCXE Rule 7—Equity Trading—Intermarket Trading System Plan. Definitions—The Exchange proposes to amend PCXE Rule 7.66, formerly PCX Rule 5.20, by adding a provision that seeks to define the term “PCX Coordinating Specialist,” and by adding Commentary .04.[14]

g. PCXE Rule 8—Trading of Certain Equity Derivatives. Nasdaq-100 Index—The Exchange proposes to add PCXE Rule 8.100(g) and Commentary .03, formerly PCX Rule 8.300(g) and Commentary .03, relating to the trading of Nasdaq-100 Index shares.[15]

h. Equity Floor Procedure Advice 2-C. Reporting of Transactions—The Exchange proposes to amend Equity Floor Procedure Advice 2-C by removing one of the exceptions provided for reporting of transactions from PCXE Rule 7.37(a).[16]

i. PCXE Rule 6—Business Conduct. Prevention of the Misuse of Material, Nonpublic Information—The Exchange proposes to amend PCXE Rule 6.3, adapted from PCX Rule 2.6(e), to add the phrase “for whom the Corporation is the Designated Examining Authority (“DEA”),” to add Commentary .02, and to eliminate Commentary .04.[17] The Exchange also proposes to remove certain unnecessary language.[18]

j. PCXE Rule 5—Listing. General Provisions and Definitions—The Exchange proposes to add PCXE Rule 5.1(b)(15), formerly PCX Rule 3.1(b)(15).[19]

Investment Company Units—The Exchange is proposing to add PCXE Rule 5.2(j)(3), formerly PCX Rule 3.2(k). The Exchange is also proposing to add PCXE Rules 5.5(g)(1) and (2), formerly Rules 3.5(g) and (h). Finally, the Exchange proposes to add Commentaries .02 and .03 to PCXE Rule 7.28(a)(1), formerly PCX Rule 5.33(a).[20]

k. PCXE Rule 6—Business Conduct. Communications to and on the Trading Facilities—The Exchange proposes to add PCXE Rule 6.17, adapted from PCX Rule 4.23.[21]

l. PCXE Rule 4—Capital Requirements and Financial Reports, Margins. Exceptions to Margins—The Exchange proposes to amend PCXE Rule 4.15(c)(5), adapted from PCX Rule 2.15-2.16, by replacing the phrase “margin required by the other provisions of this Rule” with the phrase “haircut requirements of SEC Rule 15c3-1.” Also the Exchange proposes to add Rule 4.15(c)(6).[22]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with the provisions of section 6(b) [23] of the Act, in general, and section 6(b)(5),[24] in particular, because it is designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, and, in general, to protect investors and the public interest.

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

No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing rule change has become effective pursuant to section 19(b)(3)(A) [25] of the Act and subparagraph (f)(3) of Rule 19b-4 [26] thereunder because it is concerned solely with the administration of the Exchange. 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 Start Printed Page 69111Commission, 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 such filing will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SR-PCX-00-35 and should be submitted by December 6, 2000.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[27]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See letter from Hassan Abedi, Attorney, Regulatory Policy, PCX, to Nancy Sanow, Assistant Director, Division of Market Regulation, Commission, dated November 1, 2000 (“Amendment No. 1”). In Amendment No. 1, the PCX made a correction to Rule 6.3 by adding the word “must” which had inadvertently been left out. The PCX also clarified that the removal of the phrase “or other appropriately designated forms” from Rule 6.3 was not approved by Securities Exchange Act Release No. 41083 (February 22, 1999), 64 FR 10052 (March 1, 1999) (SR-PCX-98-52). The phrase is being removed because Equity Trading Permit (“ETP”) Holders, Equity ASAP Holders, and ETF Firms are only required to submit SEC Form X-17A-5.

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4.  The rules of the PCX that governed the equities trading business of the Exchange were amended and renumbered when the PCXE was created. See Securities Exchange Act Release No. 42759 (May 5, 2000), 65 FR 30654 (May 12, 2000). Thus, the PCX rules that govern the equities business are now referred to as PCXE rules.

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5.  Language was changed mainly to refer to “ETP Holders, Equity ASAP Holders, and ETP Firms” (in the PCXE rules) instead of “members or member organizations” (in the PCX rules), and to refer to the “Corporation” (in the PCXE rules) instead of “Exchange” (in the PCX rules).

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6.  See Securities Exchange Act Release No. 42998 (June 30, 2000), 65 FR 42412 (July 10, 2000).

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7.  See Securities Exchange Act Release No. 42890 (June 1, 2000), 65 FR 36877 (June 12, 2000).

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9.  See Securities Exchange Act Release No. 42822 (May 24, 2000), 65 FR 35150 (June 1, 2000).

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10.  See Securities Exchange Act Release No. 41712 (August 5, 1999), 64 FR 44072 (August 12, 1999).

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11.  See supra note 6.

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12.  See Securities Exchange Act Release No. 42577 (March 27, 2000), 65 FR 17329 (March 31, 2000).

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13.  See Securities Exchange Act Release No. 42431 (February 16, 2000), 65 FR 9026 (February 23, 2000).

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14.  See Securities Exchange Act Release No. 42708 (April 20, 2000), 65 FR 25780 (May 3, 2000).

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15.  See supra note 7.

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16.  See Securities Exchange Act Release No. 41083 (February 22, 1999), 64 FR 10052 (March 1, 1999).

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17.  See Securities Exchange Act Release No. 40863 (December 30, 1998), 64 FR 1057 (January 7, 1999).

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18.  See Amendment No. 1, supra note 3.

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19.  See Securities Exchange Act Release No. 41983 (October 6, 1999), 64 FR 56008 (October 15, 1999).

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20.  See id.

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21.  See Securities Exchange Act Release No. 40852 (December 28, 1998), 64 FR 1058 (January 7, 1999).

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22.  See Securities Exchange Act Release No. 42453 (February 24, 2000), 65 FR 11620 (March 3, 2000).

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[FR Doc. 00-29181 Filed 11-14-00; 8:45 am]

BILLING CODE 8010-01-M