[Federal Register Volume 66, Number 143 (Wednesday, July 25, 2001)]
[Notices]
[Pages 38774-38776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18446]


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SECURITIES AND EXCHANGE COMMISSION

[Release no. 34-44571; File No. SR-PCX-2001-21]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
Pacific Exchange, Inc. Relating to Membership, Options Floor and Market 
Maker Fees

July 18, 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 May 31, 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. On July 12, 
2001, the Exchange filed Amendment No. 1 to the proposal.\3\ The 
Commission

[[Page 38775]]

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\ See Letter from Cindy L. Sink, Senior Attorney, Regulatory 
Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated by July 11, 2001 (``Amendment 
No. 1''). In Amendment No. 1, the Exchange requested that the 
proposed rule change be considered a ``non-controversial'' rule 
change pursuant to paragraph (f)(6) of Rule 19b-4 under Section 19b-
4(b)(3)(A)(iii) of the Act. In the Exchange's original filing, it 
had invoked Section 19(b)(3)(A)(ii) of the Act and Rule 19b-4(f)(2) 
thereunder as the basis for effectiveness upon filing of the 
proposed rule change. In addition, in Amendment No. 1, the PCX 
requested that the Commission accelerate the operative date of the 
proposal and waive the 5-day pre-filing notice requirement.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX is proposing to modify its Schedule of Fees and Charges for 
Market Maker Handheld Tethering Network Fees, Registered Representative 
Fees, and certain other fees designed to recover costs on leased space, 
phone maintenance and options orientation and test fees.

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
    The Exchange is proposing to make the following changes to its 
Schedule of Fees and Charges:
General Member Fees
    (1) Options Orientation and Test Fee:
    The PCX incurs certain expenses in connection with administering 
orientations and test for new members. According to the Exchange, these 
costs, which are incurred as part of the investigation, orientation and 
testing process, are currently recovered via an options study package 
and test fee, an investigation fee and a fingerprinting fee. In order 
to consolidate these fees and cover additional cost of improving the 
orientation program, the Exchange proposes to increase the orientation 
and test fee from $200 to $1,000 and to eliminate the $100 
investigation fee and the $30 and $10 fingerprinting fees. The fee 
increase is based on the costs incurred in providing an updated and 
more comprehensive curriculum. The additional costs include production, 
development, proctor fees and staff charges. The consolidated fee also 
recovers the revenues that were previously collected through the 
fingerprinting and investigation charges.
    (2) Regulatory Fees
    (i) Registered Representative Fee
    The Exchange currently charges an annual fee of $35 to all Register 
Representatives and Registered Option Principals for maintenance, new 
application, or transfer of registration status. This fee supports the 
costs related to regulatory oversight and enforcement. To better align 
PCX's fees with the actual costs of delivering these services, the 
Exchange proposes to increase the Registered Representative fee from 
$35 to $45 per year.
Options Floor Fees
    (1) Marker Maker Hand Held Tethering Fee
    Currently, Market Makers use portable hand held terminals for trade 
entry, position tracking, stock layoff and other services. To upgrade 
this system, the Exchange is installing a hardwired network. The 
Exchange proposes to impose a $500 one time signup fee per handheld and 
a $100 fee per registered user per month. These fees reflect the 
Exchange's costs of purchasing the hardware and installing the network.
    (2) Vendor Equipment Room Usage Fee
    The Vendor Equipment Room (``VER'') houses servers used to transmit 
market data and support trading systems. The PCX represents that 
currently the VER costs are not passed on to the member firms that use 
the facility. The VER overhead costs include rent, utilities, and 
insurance and the costs of developing the facility. In order to cover 
the costs of providing the facility, the Exchange proposes to impose on 
cabinet users a $2,150 fee per cabinet per month.\4\
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    \4\ The Vendor Equipment Room is a recently-opened, air-
conditioned facility housing equipment used by member firms and non-
members that are vendors (collectively, cabinet users). The proposed 
fee on cabinet users in intended to recoup development costs and 
cover the ongoing costs of operating the facility. Telephone call 
from Cindy Sink, Senior Attorney, PCX, to Geoffrey Pemble, Attorney, 
Division of Market Regulation, Commission (July 10, 2001).
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    (3) Telecom Move/Add/Change Fee
    The Exchange incurs certain expenses in Moving/Adding or Changing 
(``MAC'') phone lines on the options floor. Currently, according to the 
PCX, the telecom MAC expenses are not passed on to the members 
requesting these services. In order to align fees with PCX's expenses 
incurred in delivering telecom MAC services, the Exchange proposes to 
assess a $100 per hour fee on a pro rata basis.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \5\ of the Act, in general, and Section 6(b)(4) of the Act,\6\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received from Members, Participants or Others

    Written comments 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 been filed by the 
Exchange as a ``non-controversial'' rule change pursuant to Section 
19(b)(3)(A) of the Act \7\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\8\ Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6).\10\
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 17 CFR 240.19b-4(f)(6).
    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    The Exchange has requested that the Commission waive the 5-day pre-
filing requirement and accelerate the operative date of the proposal. 
The Commission finds that it is appropriate to accelerate the operative 
date of the proposal and designate the proposal to become operative 
immediately.\11\
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    \11\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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    The Commission finds good cause for waiving the 5-day pre-filing 
requirement and accelerating the operative date of the proposed rule 
change, as amended. Acceleration of the operative date will enable the 
Exchange immediately to impose new fees in order to recover its costs 
incurred in development and

[[Page 38776]]

maintenance or certain Exchange systems and services, consistent with 
the Section 6(b)(4) of the Act, which requires that an Exchange's rules 
provide for the equitable allocation of reasonable dues, fees, and 
other changes among members, issuers, and other persons using its 
facilities.\12\
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    \12\ 15 U.S.C. 78f(b)(4).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to be 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.\13\
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    \13\ For purposes of calculating the 60-day abrogation date, the 
Commission considers the 60-day period to have commenced on July 12, 
2001, the date the PCX filed Amendment No. 1.
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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 tot he 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 also will be 
available for inspection and copying at the principal office of the 
PCX. All submissions should refer to File No. SR-PCX-2001-21 and should 
be submitted by August 15, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
Margaret H. McFarland,
Deputy Secretary.
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    \14\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 01-18446 Filed 7-24-01; 8:45 am]
BILLING CODE 8010-01-M