[Federal Register Volume 66, Number 204 (Monday, October 22, 2001)]
[Notices]
[Page 53455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-26487]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44923; File No. 4-208]


Intermarket Trading System: Order Granting Approval of the 
Eighteenth Amendment to the ITS Plan Relating to the Pacific Exchange, 
Inc.'s Implementation of the ARCA Facility

October 11, 2001.
    On July 24, 2001, the Intermarket Trading System Operating 
Committee (``ITSOC'') submitted to the Securities and Exchange 
Commission (``Commission''), pursuant to Section 11A of the Securities 
ExchangeAct of 1934 (``Act''),\1\ and Rule 11A3a3-2 thereunder,\2\ 
proposed amendment (``Eighteenth Amendment'') to the restated ITS 
Plan.\3\ The proposed amendment eliminated provisions in the ITS Plan 
relating to the PCX's Remote Specialists, and included provisions 
relating to the PCX's implementation of the Archipelago (``ARCA'') 
facility.\4\ The ARCA facility is a computerized electronic facility 
for trading equity securities at the PCX. Notice of the proposed 
amendment appeared in the Federal Register on August 16, 2001.\5\ The 
Commission received no comments on the proposed amendment. This order 
approves the proposed amendment.
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    \1\ 15 U.S.C.; 78k-1.
    \2\ 17 CFR 240.11Aa3-2.
    \3\ The ITS is a National Market System (``NMS'') plan, which 
was designed to facilitate itermarket trading in exchange-listed 
equity securities based on current quotation information emanating 
from the linked markets. See Securities Exchange Act Release No. 
19456 (January 27, 1983), 48 FR 4938 (February 3, 1983).
    The ITS Participants include the American Stock Exchange LLC) 
``Amex''), the Boston Stock Exchange, Inc. (``BDE''), the Chicago 
Board Options Exchange, Inc. (``CBOE''), the Chicago Stock Exchange, 
Inc. (``CHX''), the Cincinnati Stock Exchange, Inc. (``CSE''), the 
National Association of Securities Dealers, Inc. (``NASD''), the New 
York Stock Exchange, Inc. (``NYSE''), the Pacific Exchange, Inc. 
(``PCX''), and the Philadelphia Stock Exchange, Inc. (``PHLX'') 
(``Participants'').
    \4\ The PCX filed a proposed rule change that details the 
operation of ARCA and establishes ARCA as a facility of the 
Exchange. See Securities Exchange Act Release No. 43608 (November 
21, 2000), 65 FR 78822 (December 15, 2000).
    \5\ See Securities Exchange Act Release No. 44662 (August 8, 
2001), 66 FR 43036.
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    The proposed amendment describes how the ARCA facility will 
interact with ITS. It provides a formula that the ARCA must comply with 
which limits both share volume and trade volume that the ARCA facility 
may execute using ITS. If the ARCA facility exceeds the limitations in 
the formula, the PCX must stop sending commitments originated by the 
ARCA facility for a month. The proposed amendment also provides that 
the PCX may prepare an analysis of the effect of the ceilings in the 
formula on the ability of the ARCA facility to access Participant 
markets via ITS. The terms for linking the ARCA facility to ITS have 
been discussed extensively and were agreed upon by the ITS 
Participants. As noted, the Commission received no comments in response 
to publication of the Eighteenth Amendment.
    The Commission finds that the proposed amendment is consistent with 
the Act and the rules and regulations thereunder applicable to the ITS 
and, in particular, Sections 11A(a)(1)(C)(ii) and (D) of the Act,\6\ 
and Rule 11A3-2(c)(2) thereunder,\7\ which require among other things, 
that a plan amendment must be necessary or appropriate in the public 
interest, for the protection of investors and the maintenance of fair 
and orderly markets, and shall remove impediments to, and perfects the 
mechanisms of, a national market system.
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    \6\ 15 U.S.C. 78k-1(a)(1)(C)(ii) and (D).
    \7\ 17 CFR 240.11A3-2(c)(2).
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    The Commission believes that linking the ARCA facility to ITS will 
provide a new and potentially more efficient way to execute trading 
interest.
    In addition, the Commission believes that the proposed amendment 
will be beneficial to brokers, dealer and investors because it 
facilitates the linkage of all markets through communication and data 
processing facilities.
    It is therefore ordered, pursuant to Section 11A(a)(3)(B) of the 
Act,\8\ that the proposed Eighteenth Amendment be, and hereby is, 
approved.\9\
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    \8\ 15 U.S.C. 78k-1(a)(3)(B).
    \9\ The Eighteenth Amendment states that it will become 
effective upon the later of the approval of the Amendment of SR-PCX-
00-25 (the rule filing to establish ArcaEx as a facility of PCX).

    For the Commission, by the Divison of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(29).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-26487 Filed 10-19-01; 8:45 am]
 BILLING CODE 8010-01-M