[Federal Register Volume 66, Number 45 (Wednesday, March 7, 2001)]
[Notices]
[Pages 13822-13823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-5544]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-44026; File No. SR-PCX-01-03]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Pacific Exchange, Inc. and Amendment No. 1 Thereto To
Permit an Officer or Director of a Facility of PCX Equities To Serve on
the PCX Equities Board of Directors
February 28, 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 January 9, 2001, the Pacific Exchange, Inc. (``PCX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the PCX.
On February 20, 2001, PCX filed Amendment No. 1 to the proposal.\3\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons, as amended.
I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The PCX proposes to amend the Bylaws of its wholly-owned
subsidiary, PCX Equities, Inc. (``PCXE'' or ``Corporation'') to permit
an officer or director of a facility of PCXE to serve on its Board of
Directors. The text of the amended PCXE Bylaw is as follows:
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Cindy L. Sink, Senior Attorney, Regulatory
Policy, PCX, to Marc F. McKayle, Special Counsel, Division of Market
Regulation, Commission, dated February 16, 2001 (``Amendment No.
1''). In Amendment No. 1, the Exchange amended the filing to
indicate its belief that the statutory basis for the Commission's
approval of the proposed rule change is section 6(b)(3) of the Act,
as opposed to section 6(b)(5). The Exchange also made clear that the
proposed rule change would not alter the present compositional
balance of the PCXE Board of Directors between public directors and
directors affiliated with brokers or dealers, and that at least 20%
of the PCXE Board of Directors, but no fewer than two, will continue
to be nominated by the Equity Trading Permit Holders Nominating
Committee whether the size of the Board remains at ten (10) or is
expanded to twelve (12).
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Proposed additions are italicized.
ARTICLE III
Board of Directors
Number; Election; Qualification; Term Nomination
Sec. 3.02.
(a) The Board of Directors shall consist of not less than ten (10)
or more
[[Page 13823]]
than twelve (12) directors, with the Board of Directors currently
contemplated to consist initially of ten (10) members. The authorized
number of Directors shall be as determined from time to time by
resolution of the Board of Directors. At least fifty percent (50%) of
the Directors will be persons from the public and will not be, or be
affiliated with, a broker or dealer in securities. At least twenty
(20%) of the Directors (but no fewer than two (2) Directors) will be
nominees of the ETP/Equity ASAP Nomination Committee, pursuant to Rule
3 of the Corporation. An officer or director of a facility of the
Corporation may serve on the Board of Directors. The term of office of
a Director shall not be affected by any decrease in the authorized
number of Directors.
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, the Board of Directors may consist of not less than (10)
or more then twelve (12) directors. Currently the Board of Directors
consists of ten (10) members. The authorized number of Directors is
determined from time to time by resolution of the Board of Directors.
At least fifty percent (50%) of the Directors are persons from the
public (i.e., not a broker or dealer in securities or affiliate
thereof). At least twenty (20%) of the Directors (but no fewer than two
(2) Directors) will be nominees of the ETP/Equity ASAP Nomination
Committee, pursuant to Rule 3 of the Corporation.\4\
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\4\ The proposal will not alter the compositional or nomination
criteria for the PCXE Board of Directors. See Amendment No. 1, supra
note 3.
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The Exchange and its wholly-owned subsidiary, PCXE, propose to
change this PCXE Bylaw to permit an officer or director of a facility
of PCXE (Corporation) to serve on the Board of Directors of PCXE.
The PCX and PCXE have entered into various agreements with
Archipelago Holding, L.L.C. (``Archipelago'' or ``Company'') under
which Archipelago Exchange, L.L.C. (``Arca''), a subsidiary of
Archipelago Holdings, L.L.C. would operate Area as a facility of the
PCXE.\5\ PCX, through PCXE, recently proposed to create a new
electronic trading facility of the PCXE called Archipelago Exchange.
The proposed rule change would permit an Archipelago member, officer or
director to serve on the Board of Directors.
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\5\ See Securities Exchange Act Release No. 43608 (November 21,
2000), 65 FR 78822 (December 15, 2000) (Notice of File No. SR-PCX-
00-25 proposing to create a new electronic trading facility of the
PCXE called Archipelago Exchange).
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The proposed Bylaw amendment calls for a designee of a ``facility
of the Corporation'' to provide flexibility. Under the proposal,
permitting a facility designee to serve on the PCXE Board of Directors
would not decrease the number of public members or number of nominees
of the ETP/Equity ASAP Nomination Committee serving on the Board.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of section 6(b)(3),\7\ in particular, in that it is
consistent with the fair representation principles set forth in the
Act.\8\
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(3).
\8\ See Amendment No. 1, supra note 3.
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B. Self-Regulatory Organization's Statement 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
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
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 self-regulatory organization consents, the Commission will--
(A) by order approve such 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 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 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-01-03 and should
be submitted by March 28, 2001.
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-5544 Filed 3-6-01; 8:45 am]
BILLING CODE 8010-01-M