Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”)  and Rule 19b-4 thereunder, notice is hereby given that on August 1, 2001, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) the proposed rule change, and amended such proposed rule change on September 6, 2001, as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.
I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to clarify its interpretation of the PCX Constitution to eliminate the restriction that only public Governors may serve on the Nominating Committee.
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 the sections A, B, and C below, of the most significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
On November 16, 2000, the Commission approved the Exchange's Constitutional change that required at least one public representative serve on the Nominating Committee (“Committee”) and permitted the service of Governors on the Committee. That filing stated that the Exchange interpreted the rule proposal to mean that the only Governors permitted on the Committee were public Governors. Upon further consideration and review, the PCX has determined that this interpretation is too narrow.
The composition of the Committee is governed by Article III, Sections 4(a) and 4(b) of the PCX Constitution. Section 4(a) provides: “At each annual meeting there shall be elected by the membership, by ballot, for a term of one Start Printed Page 49056year, a Nominating Committee of nine persons, one of whom shall be nominated as Chair and one of whom shall be nominated as Vice Chair who are eligible for election in accordance with Section 4(b) of this Article III, none of whom shall be an officer of the Exchange. The Nominating Committee shall assume duties as provided in Section 4(d) of this Article III.” Section 4(b) provides: “The nine members of the Nominating Committee eligible to be elected at each annual meeting shall be as follows: At least one Committee member shall be a representative of the public. At least seven Committee members shall be members or office members or office allied members, Equity Trading Permit Holders, Equity ASAP Holders or Allied Persons of an ETP firm or an Equity ASAP Holder.” Therefore, eligible PCX governors are not restricted from serving on the Committee. The Constitution also permits a public Governor to serve as a representative of the public.
Permitting Governors to serve on the Committee is consistent with the PCX Constitutional language, and the basic composition is not affected. There must always be at least one public representative on the Committee, and there may be up to two. The Exchange maintains the flexibility it needs to meet its obligation to have a fair representation of Exchange members. Therefore, the Exchange submits this clarification to its interpretation of Article III, Section 4(b) of the PCX Constitution to eliminate the restriction that only public Governors may serve on the Committee.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is consistent with Section 6(b) of the Act  in general, and furthers the objectives of Section 6(b)(5)  in particular, in that it is designed to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. The Exchange also believes that the proposed rule change, as amended, furthers the objectives of Section 6(b)(3) of the Act, in that it is designed to assure a fair representation of Exchange members in the selection of the Exchange's Governors.
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 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
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
The proposed rule change, as amended, has become effective pursuant to Section 19(b)(3)(A)(i) of the Act  and subparagraph (f)(1) of Rule 19b-4 thereunder  because it constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule. At any time within 60 days of the filing of such proposed rule change, as amended, 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 futherance 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. 20549-0609. 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 Section. 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-2001-28 and should be submitted by October 16, 2001.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
3. In Amendment No. 1, the PCX clarified its interpretation of Article III, Sections 4(a) and 4(b) of the PCX Constitution to eliminate the restriction that only public Governors may serve on the Nominating Committee. See letter from Cindy L. Sink, Senior Attorney, PCX, to Nancy J. Sanow, Assistant Director, Division of Market Regulations, SEC, dated September 5, 2001 (“Amendment No. 1”).Back to Citation
4. See Securities Exchange Act Release No. 43576 (November 16, 2000), 65 FR 71185 (November 29, 2000) (Order approving File No. SR-PCX-00-09).Back to Citation
[FR Doc. 01-23837 Filed 9-24-01; 8:45 am]
BILLING CODE 8010-01-M