[Federal Register Volume 67, Number 26 (Thursday, February 7, 2002)]
[Notices]
[Pages 5869-5870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2933]



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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45374; File No. SR-PCX-2002-06]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to an Extension of the Interim Intermarket Linkage Program

January 31, 2002.
    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 January 29, 2002, 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 PCX. 
The Exchange filed the proposed rule change pursuant to section 
19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(6) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6). In its filing, the PCX requested 
that the Commission waive the rule's requirement of a 30-day 
operative delay. The PCX also requested that the Commission shorten 
the rule's requirement of a five-day pre-filing notice to a three-
day pre-filing notice. Telephone conversation between Mai Shiver, 
Senior Attorney, PCX, and Jennifer Lewis, Attorney, Division of 
Market Regulation, Commission, on January 30, 2002.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX proposes to extend the effective date of its rules 
providing for interim linkage from January 31, 2002 to the earlier of 
January 31, 2003 or such time when the participating exchanges 
implement permanent intermarket linkage in the options market.\5\ The 
text of the proposed rule change is below; new language is italicized.
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    \5\ The Commission approved the Plan for the purpose of Creating 
and Operating an Intermarket Options Linkage (``Linkage Plan'') in 
July 2000. See Securities Exchange Act Release No. 43086 (July 28, 
2000), 65 FR 48023 (August 4, 2000).
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Interim Intermarket Linkage Program
    RULE 6.91  Pilot Program for Away Market Maker Access.
    (d) Implementation of the Pilot Program. The Chairman, or his 
designee, may implement the Pilot Program, in whole or in part, with 
respect to specific Participating Exchanges, to the extent that any 
such Participating Exchange has agreed to implement corresponding 
aspects of the Pilot Program. Lead Market Maker participation in the 
Pilot Program will be voluntary. The Pilot Program will expire on the 
earlier of January 31, 2003 or at such time when the Participating 
Exchanges implement permanent linkage.

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
    On February 20, 2001, the Commission issued a Notice of Filing and 
Immediate Effectiveness of a pilot program authorizing the PCX to 
participate in an interim linkage plan with the other options 
exchanges.\6\ The interim linkage plan utilizes existing systems to 
facilitate the sending and receiving of order flow between PCX market 
makers and their counterparts on the other option exchanges. The key 
component of the interim linkage is for the participating exchanges to 
open their automated customer execution systems, on a limited basis, to 
market maker orders. Market makers are able to designate certain orders 
as ``customer'' orders and are thus eligible for automatic execution 
and similar processing efficiencies.
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    \6\ See Securities Exchange Act Release No. 43986 (February 20, 
2001), 66 FR 12578 (February 27, 2001) (SR-PCX-2001-10).
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    The options exchanges implemented the interim linkage pending 
completion of a permanent linkage. That linkage will provide enhanced 
connectivity between the markets and will have additional rules and 
mechanisms to help investors achieve the best execution of their 
orders. While work continues on the permanent linkage, the Exchange 
currently does not believe that permanent linkage will be implemented 
until late this year. At the same time, the Exchange's interim linkage 
rules will expire on January 31, 2002. The Exchange proposes to extend 
the effectiveness of the interim linkage rules until the full 
implementation of the permanent intermarket linkage in the options 
market, or January 31, 2003, whichever comes first. The Exchange 
believes investors will benefit from the continued operation of interim 
linkage pending completion of permanent linkage.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with section 
6(b) of the Act,\7\ in general, and section 6(b)(5),\8\ in particular, 
because it is designed to promote just and equitable principles of 
trade, to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transaction in securities, and, in general, to protect 
investors and the public interest.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 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

    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 ActionBecause 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, if consistent with 
the protection of investors and the public interest; provided that the 
self-regulatory organization has 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 
days prior to the date of filing of the proposed rule change, or such 
shorter time as designated by the Commission, the proposed rule change 
has become effective pursuant to section 19(b)(3)(A)

[[Page 5870]]

of the Act \9\ and Rule 19b-4(f)(6)\10\ thereunder.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6)\11\ does not 
become operative prior to 30 days after the date of filing or such 
shorter time as the Commission may designate if such action is 
consistent with the protection of investors and the public interest. 
The PCX has requested, in order to permit the uninterrupted operation 
of the interim linkage, that the Commission accelerate the 
implementation of the proposed rule change so that it may take effect 
prior to the 30 days specified in Rule 19b-4(f)(6)(iii).\12\ The 
Commission finds that the proposed rule change is consistent with the 
protection of investors and the public interest and, therefore, has 
determined to make the proposed rule change operative as of the date of 
this notice.\13\
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes of accelerating the implementation of the 
proposed rule change only, the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
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    A proposed rule change filed under Rule 19b-4(f)(6)\14\ normally 
requires that a self-regulatory organization give the Commission 
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 filing of the proposed rule 
change. However, Rule 19b-4(6)(iii)\15\ permits the Commission to 
designate a shorter time. The PCX seeks to have the five-business-day 
pre-filing requirement shortened to a three-business-day pre-filing 
requirement with respect to the proposed rule change.\16\ The 
Commission has determined to shorten the five-business-day pre-filing 
requirement with respect to this proposal.
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See supra note 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 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.

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 Room. 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 Number SR-PCX-2002-06 and 
should be submitted by February 28, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-2933 Filed 2-6-02; 8:45 am]
BILLING CODE 8010-01-P