[Federal Register Volume 67, Number 28 (Monday, February 11, 2002)]
[Notices]
[Pages 6309-6310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3237]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45382; File No. SR-PCX-2002-02]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Pacific Exchange, Inc. Relating to the Manner in Which Computer 
Generated Orders Are Designated

February 1, 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 7, 2002, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items have been prepared by the Exchange. On 
January 25, 2002, the PCX submitted Amendment No. 1 to the proposed 
rule change.\3\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, 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, PCX, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated January 24, 2002 (``Amendment No. 
1''). In Amendment No. 1, the PCX changed the basis for immediate 
effectiveness for the proposed rule change. Specifically, the PCX 
re-designed the proposed rule change as a filing made under Rule 
19b-4(f)(5) under the Act relating to a change in an existing order-
entry or trading system of a self-regulatory organization, as 
opposed to a filing under Rule 19b-4(f)(1) relating to a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule. For purposes of 
calculating the 60-day period within which the Commission may 
summarily abrogate the proposed rule change, as amended, under 
section 19(b)(3)(C) of the Act, the Commission considers that period 
to commence on January 25, 2002, the date the PCX filed Amendment 
No. 1. See 15 U.S.C. 78s(b)(3)(C).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX proposes to change the manner in which member firms are 
required to designate an order as ``computer generated.'' The text of 
the proposed rule change, as amended, is available at the PCX and the 
Commission.

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, as 
amended, 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 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 purpose of the proposed rule change, as amended, is to change 
the manner in which member firms are required to designate an order as 
``computer generated'' to accurately reflect current technological 
advances.
    On September 22, 2000, the Commission approved a PCX proposed

[[Page 6310]]

rule change relating to option orders that are created and communicated 
to the Exchange electronically, without manual input (``computer 
generated orders'').\4\ Under that proposed rule change, computer 
generated orders are not eligible for automatic execution via the 
Exchange's Auto-Ex System. To prevent computer generated orders from 
being processed through Auto-Ex, Member Firms sending computer 
generated orders electronically to the Exchange are required to 
designate them with a ``CG'' in the ``additional instruction'' field of 
the Common Message Switch (``CMS'')\5\ record layout. Orders so 
designated are re-routed for representation by a Floor Broker. The 
Exchange represents that due to changes in technology specifications, 
the indicator ``CG'' orders must now be designated on line 3C, field 1, 
of the CMS record layout. The Exchange represents that Orders so 
designated will be re-routed for representation by a Floor Broker.
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    \4\ See Securities Exchange Act Release No. 43328 (September 22, 
2000), 65 FR 58834 (October 2, 2000) (SR-PCX-00-13).
    \5\ The CMS is the options order format generally followed by 
all options exchanges.
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    The proposed rule change, as amended, requires member firms to 
identify CG orders ``in a form and manner as prescribed by the 
Exchange.'' The PCX represents that this will provide it with 
flexibility to change the requirements for identifying CG orders with 
technological advances.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with section 
6(b) of the Act,\6\ in general, and furthers the objectives of section 
6(b)(5) of the Act,\7\ in particular, in that it is designed to promote 
just and equitable principles of trade.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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, as 
amended, 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, as amended, were 
neither solicited nor received.

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

    The foregoing rule change, as amended, has become effective 
pursuant to section 19(b)(3)(A) of the Act \8\ and subparagraph (f)(5) 
of Securities Exchange Act Rule 19b-4 \9\ thereunder because it effects 
a change in an existing order-entry or trading system of a self-
regulatory organization that (i) does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) does not have the 
effect of limiting the access to or availability of the system. At any 
time within 60 days after January 25, 2002, 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(5).
    \10\ See 15 U.S.C. 78(b)(3)(C).
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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, NW, Washington, 
DC 20549-0609. Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change, as 
amended, 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 No. SR-PCX-2002-02 and should be 
submitted by March 4, 2002.

    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-3237 Filed 2-8-02; 8:45 am]
BILLING CODE 8010-01-P