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Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. Relating to Prohibition of Harassment

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Start Preamble January 31, 2001.

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 December 13, 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 Start Printed Page 9400prepared by the Exchange. The proposed rule change has been filed by the Phlx as a “non-controversial” rule change under Rule 19b-4(f)(6) of the Act.[3] 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 adopt a new rule to prohibit harassment, intimidation, “refusal to deal” and retaliation in the option listing process and to prohibit harassment of another for “seeking to act competitively.”

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 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 PCX 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

Currently PCX Rule 6.2(b) sets forth prohibitions on certain manner of conduct on the floor of the Exchange. Under this rule, a member will be sanctioned if two Floor Officials or the Options Floor Trading Committee make the determination that the member has acted in a manner that impairs the maintenance of a fair and orderly market or the member's conduct impairs public confidence in the operations of the Exchange. The purpose of the proposed rule is to broaden the scope of Rule 6.2 to prohibit harassment. The proposed rule seeks to prevent harassment and intimidation of members who act or seek to act competitively.

The proposed rule would make it “conduct inconsistent with just and equitable principles of trade for any member, member organization or associated person of a member or member organization to engage, directly or indirectly, in any conduct that threatens, harasses, intimidates, constitutes a ‘refusal to deal’ or retaliate against any other member . . .” because such member: (1) Has made a proposal to any exchange or other market to list or trade any option issue; (2) has advocated or made proposals concerning the listing or trading of an option issue on any exchange or other market; (3) has commenced making a market in or trading any option issue on any exchange or other market; (4) seeks to increase the capacity of any options exchange or the options industry to disseminate quote or trade data; (5) seeks to introduce new option products; or (6) seeks to act competitively.

The PCX believes that the prohibited conduct discussed above is inconsistent with the obligation of all members to their customers, the Exchange, and the public interest in the operation of fair and efficient options markets. The PCX will strictly enforce the requirements of the proposed rule. Any violations of this rule will be referred to the Exchange's Enforcement Division for appropriate disciplinary action.[4]

2. Statutory Basis

The Exchange believes that the proposed rule change is consistent with section 6(b) of the Act,[5] in general, and furthers the objectives of section 6(b)(5),[6] in particular, in that it is designed to promote just and equitable principles of trade, prevent fraudulent and manipulative acts and practices, and protect investors and the public interest by prohibiting harassment in the listing of options.

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 were neither solicited nor received.

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

The proposed rule change has been filed by the Exchange as “non-controversial” rule change pursuant to section 19(b)(3)(A) of the Act [7] and Rule 19b-4(f)(6) thereunder.[8] Because the foregoing 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) by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, it has become effective pursuant to section 19(b)(3)(A) of the Act [9] and Rule 19b-4(f)(6) [10] thereunder.[11] At any time within 60 days of the filing of the 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, 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 at 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 the File No. SR-PCX-00-46 and should be submitted by February 28, 2001.Start Printed Page 9401

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[12]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


4.  The PCX will revise its Employee Handbook and Statements of Fiduciary Responsibilities for Governors and Committee Members to include the same prohibitions on harassment. The Exchange must file with the Commission a proposed rule change incorporating these additional changes. Telephone call from Geoffrey Pemble, Attorney, Division of Market Regulation, SEC, to Hassan Abedi, Attorney, Regulatory Policy, PCX (Janary 30, 2001).

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11.  The Exchange provide the Commission with the five business day notice required by Rule 19b-4(f)(6) of the Act.

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[FR Doc. 01-3157 Filed 2-6-01; 8:45 am]