SEC Approves Pacific Exchange Demutualization Plan
PCX to be First for-Profit Stock Exchange in U.S.
SAN FRANCISCO, May 10 /PRNewswire/ -- The Pacific Exchange (PCX) was approved by the U.S. Securities and Exchange Commission as the nation's first for-profit stock exchange late last week. The SEC action follows an overwhelming vote by PCX members this past October to demutualize and convert the equities business into a wholly owned subsidiary of the Pacific Exchange.
``I am delighted to receive the SEC's endorsement for our proposal,'' said Philip D. DeFeo, PCX Chairman and CEO. ``Demutualization is critically important to our ability to adapt to emerging market conditions and remain a vibrant institution. We need a new corporate structure, a new business model to carry us forward. This decision provides that platform.''
The PCX plan separates ownership of the Exchange from access to the equities trading floors and systems of the Exchange. It establishes PCX Equities, Inc. as a new corporation with its own board of directors. Under the plan, equity trading permits (ETPs) will replace Exchange seats, as the means for individuals and firms to trade on the Pacific's Los Angeles and San Francisco trading floors. DeFeo indicated he expects to begin issuing ETPs on June 1, 2000.
In April, the Exchange announced plans to align with Archipelago to create the country's first fully electronic stock market for stocks listed on the New York and American stock exchanges and the Nasdaq Stock Market. Archipelago CEO Gerald D. Putnam praised the SEC's decision and said, ``The innovative, entrepreneurial spirit of PCX members was combined with the enlightened regulatory spirit prevailing in Washington, and a new world of opportunities is opening for investors. This is a milestone for the Pacific Exchange and our new marketplace.''
DeFeo added, ``The members and staff of the Exchange have worked diligently on this effort, and the Commission and its staff did as well. In this environment, being first-to-market has tremendous advantages. But it's also a challenge for those charged with market integrity and maintaining investor confidence. The SEC wanted to be very sure that our proposal helped establish an appropriate model and precedent for those who will follow us. We are pleased that our mutual objectives could be met.''
For more information about the Pacific Exchange, visit the PCX Web site at www.pacificex.com.
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