[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Notices]
[Pages 3631-3632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1153]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43811; File No. SR-00-38]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Modifying its Options Trade-Related Transaction Charges and Changing 
its Firm Transaction Fee

January 5, 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 November 16, 2000, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') 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 
Exchange.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange filed its proposed rule change on November 16, 
2000. On December 15, 2000, however, the Exchange filed Amendment 
No. 1, which clarified that the proposed fee is comparable to the 
fee charged by the Philadelphia Stock Exchange, Inc. (``Phlx''). See 
Letter from Hassan Abedi, Attorney, Regulatory Policy, PCX, to Susie 
Cho, Attorney, Division of Market Regulation (``Division''), 
Commission (December 15, 2000).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its Schedule of Rates and Charges to 
create a new fee category in the transactions portion of the ``PCX 
Options: Trade-Related Charges.'' The new fee category will be entitled 
``Broker-Dealer.'' \4\ The PCX also seeks to change the fees charged 
for firm transactions.
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    \4\ The term ``Broker-Dealer'' as used in this rule filing will 
include transactions in which a market maker is trading for a 
customer account, any trade for a joint back officer (``JBO'') 
account, all trades for a firms account, except trades in which the 
firm is trading with its own customer on contra side.

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[[Page 3632]]

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 
Section 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 proposes to amend its Schedule of Rates and Charges to 
create a new fee category in the transactions portion of the ``PCX 
Options: Trade-Related Charges.'' The new fee category will be entitled 
``Broker-Dealer.'' The PCX also seeks to change the fees charged for 
firm transactions.
    Currently, the PCX Schedule of Rates and Charges contains tow 
categorized of transactions under its options trade related charges. 
These categories include market maker transactions and firm 
transactions. The market maker charge is $0.21 per contract. The firm 
charge consists of $0.85 per contract side where the premium is less 
than $1.00 per contract and a $0.115 per contract side where the 
premium is $1.00 or more per contract. This fee structure does not 
address those instances where a broker/dealer processes a transaction 
through a customer account of the market maker or through a firm 
account created through a JBO arrangement with a clearing firm. In 
these situations the broker/dealer pays no transaction fees (customer 
account) or pays the applicable firm fee.
    The Exchange now proposes to modify its Schedule of Rates and 
Charges. First, the Exchange proposes to change its options trade-
related transaction charges by creating a new category entitled 
``Broker-Dealer.'' The PCX believes that this modification is needed in 
order to create a billing category for broker-dealer activity that does 
not fall within the structure of the Schedule of Rates and Charges. 
This new category will cover transaction and comparison charges 
incurred by broker-dealer activity originating both on and off the PCX 
floor. This new fee consists of $0.19 per contract transaction charge 
and $0.05 per contract comparison charge. The fee will apply to broker-
dealers who are routing orders through firm or customer accounts 
carried by member clearing firms. The broker-dealer fee does not apply 
to certain firm/proprietary orders that are included within the firm 
transaction charge.
    The PCX believes that the propsed fee isreasonable. The Exchange 
alsorepresents that it is comparable to fees charged by the Phlx.\5\ 
Like the broker-dealer charge applied by the Phlx, the PCX's proposed 
broker-dealer fee applies to ordersfor any account in which the holder 
of a beneficial interest is a broker-dealer or person associated with 
or employed by a broker-dealer, including JBO accounts.\6\
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    \5\ See Securities Exchange Act Release No. 43558 (November 14, 
2000), 65 FR 69984 (November 21, 2000).
    \6\ Id.
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    The Exchange also propooses tochange its firm transaction fee. The 
firm transaction fee applies to member firm proprietary trades that 
have a customer of that firm on the contra side of the transaction. The 
simplify billing, the Exchange proposes tochange the rate to a revenue 
neutral rate of $0.100 per contract regardless of premium size.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general, and furthers the 
objectives of Section 6(b)(4) \8\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among its members and other persons using its facilities.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The PCX 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

    The Exchange did not solicit or receive comments on the proposed 
rule change.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\9\ and Rule 19b-4(f)(2) thereunder,\10\ in 
that it establishes or changes a due, fee, or other charge imposed by 
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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 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-00-38 and should be submitted by February 6, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-1153 Filed 1-12-01; 8:45 am]
BILLING CODE 8010-01-M