[Federal Register Volume 66, Number 86 (Thursday, May 3, 2001)]
[Notices]
[Pages 22281-22282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11088]



[[Page 22281]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44231; File No. SR-PCX-2001-20]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to One Point Strike Price Intervals for Options on Exchange-
Traded Fund Shares and the Hours of Trading for Options on the Nasdaq-
100 Index Tracking Stock

April 27, 2001.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on April 5, 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 
Exchange. The Exchange has designated the proposed rule change as 
constituting a ``non-controversial'' rule change under paragraph (f)(6) 
of Rule 19b-4 under the Act.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 17 CFR 240.19b-4(f)(6).
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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 PCX Rule 6.4 by adding Commentary 
.04 to create one point strike price intervals for options on Exchange-
Traded Fund Shares. The PCX also proposes to amend PCX Rule 4.2 by 
adding Commentary .02 to establish the hours of trading for options on 
the Nasdaq-100 Index Tracking Stock, which is a particular type of 
Exchange-Traded Fund Shares,\4\ from 6:30 a.m. to 1:15 p.m. Pacific 
Time (``PT''), except the last trading day of each calendar month, when 
trading in options on Nasdaq-100 Index Tracking Stock will end at 1:05 
p.m. PT. Below is the text of the proposed rule change. Proposed new 
language is italicized, and proposed deletions are in brackets.
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    \4\ The Nasdaq-100, and Nasdaq-100 Index, 
and Nasdaq are trade or service marks of The Nasdaq Stock 
Market, Inc. (with its affiliates, the ``Corporations'') and are 
licensed for use by the Exchange. Options on Nasdaq-100 Index 
Tracking Stock (the ``Products'') have not been passed on by the 
Corporations as to their legality or suitability. The Products are 
not issued, endorsed, sold, or promoted by the Corporations. The 
Corporations make no warranties and bear no liability with respect 
to the Products. The Corporations do not guarantee the accuracy and/
or uninterrupted calculation of the Nasdaq-100 Index or 
any data included therein. The Corporations make no warranty, 
expressed or implied, as to results to be obtained by Licensee, 
owners of the Products, or any other person or entity from the use 
of the Nasdaq-100 Index or any data included therein. The 
Corporations make no express or implied warranties, and expressly 
disclaim all warranties of merchantability or fitness for a 
particular purpose or use with respect to the Nasdaq-100 
Index or any data included therein. Without limiting any 
of the foregoing, in no event shall the Corporations have any 
liability for any lost profits or special, incidental, punitive, 
indirect, or consequential damages, even if notified of the 
possibility of such damages.
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* * * * *

para. 3703 Trading Sessions

    Rule 4.2--No change.
    Commentary:
    .01--No change.
    .02 The hours for trading options on Nasdaq-100 Index Tracking 
Stock will commence at 6:30 a.m. and end at 1:15 p.m. each business 
day, except the last trading day of each calendar month, when trading 
in options on Nasdaq-100 Index Tracking Stock will end at 1:05 p.m.
* * * * *

para. 4745 Series of Options Open for Trading

    Rule 6.4(a)-(e)--No change.
    Commentary:
    .01-.03--No change.
    .04 The interval of strike prices of series of options on Exchange-
Traded Fund Shares will be $1 or greater where the strike price is $200 
or less.
* * * * *

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 
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

1. Purpose
    The purpose of the proposed rule change is to provide one point 
strike price intervals for options on Exchange-Traded Fund Shares and 
to establish the hours of trading in options on the Nasdaq-100 Index 
Tracking Stock from 6:30 a.m. to 1:15 p.m. PT, except the last trading 
day of each calendar month, when trading in options on the Nasdaq-100 
Index Tracking Stock will end at 1:05 p.m. PT.
    The PCX received approval from the Commission to trade options on 
Exchange-Traded Fund Shares on February 28, 2001.\5\ The PCX proposes 
to amend Rule 6.4 by adding Commentary .04 regarding strike price 
intervals for options on Exchange-Traded Fund Shares to bracket the 
Fund Shares at one point intervals up to a share price of $200. This 
proposed amendment is consistent with the strike price interval 
established for options on Exchange-Traded Fund Shares on the American 
Stock Exchange, LLC (``Amex'')\6\ and by the Philadelphia Stock 
Exchange, Inc. (``Phlx'').\7\
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    \5\ See Securities Exchange Act Release No. 44025 (February 28, 
2001), 66 FR 13986 (March 8, 2001) (Order approving SR-PCX-01-12).
    \6\ See Securities Exchange Act Release No. 40157 (July 1, 
1998), 63 FR 37426 (July 10, 1998) (Order approving SR-Amex-96-44).
    \7\ See Securities Exchange Act Release No. 44055 (March 8, 
2001), 66 FR 15310 (March 16, 2001) (Order approving SR-Phlx-01-32).
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    The PCX also proposes to amend its hours of business to trade 
options on the Nasdaq-100 Index Tracking Stock in PCX Rule 4.2 from 
6:30 a.m. to 1:15 p.m. PT, except the last trading day of a calendar 
month, when trading in options on the Nasdaq-100 Index Tracking Stock 
will end at 1:05 p.m. PT. These hours are consistent with the trading 
of options on Nasdaq-100 Index Tracking Stock on the Amex and the Phlx.
    The PCX believes that these amendments will increase investor 
protection by allowing options on Exchange-Traded Fund Shares and, in 
particular, options on the Nasdaq-100 Index Tracking Stock to trade at 
the same strike price intervals and trading hours on the PCX as on 
other exchanges. The PCX believes that these amendments will enable the 
PCX to compete with other exchanges in these products.
2. Statutory Basis
    The Exchange believes that the proposed rule change will assist in 
allowing the Exchange to offer investors another choice of venue to 
conduct trading in these products. Thus, the Exchange believes that the 
proposed rule change is consistent with Section 6(b) of the Act,\8\ in 
general, and furthers

[[Page 22282]]

the objectives of Section 6(b)(5) \9\ in particular, in that it is 
designed to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of free and open market and a 
national market system, and, in general, to protect investors and the 
public interest.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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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 has been filed by the Exchange as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act 
\10\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\11\ Because the 
foregoing proposed rule change: (i) Does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \12\ and 
Rule 19b-4(f)(6).\13\ The Exchange also provided the Commission with 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of the filing of the proposed rule 
change. 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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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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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 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 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-2001-20 and should 
be submitted by May 24, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-11088 Filed 5-2-01; 8:45 am]
BILLING CODE 8010-01-M