[Federal Register Volume 67, Number 52 (Monday, March 18, 2002)]
[Notices]
[Pages 12074-12075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6450]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45544; File No. SR-PCX-2002-04]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating to Permanent Adoption of 
Decimal Pricing and the Establishment of a Minimum Price Variation for 
Quoting in Equity Securities and Options

March 12, 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 15, 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 PCX. 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.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The PCX fully implemented the Commission's order requiring it to 
convert prices in equity securities and options from fractions to 
decimals on a pilot basis. Having fully implemented decimal pricing and 
established the minimum price variation (``MPV'') in each market for 
quoting equity securities and options, the Exchange submits this 
proposal to permanently adopt the changes that the Exchange has made to 
its rules. The Exchange is not making any changes to its rules; rather, 
the Exchange is permanently adopting the rule changes that were 
initially implemented on a pilot basis.\3\
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    \3\ See Securities Exchange Act Release No. 43369 (September 27, 
2000), 65 fr 59485 (October 5, 2000) (SR-PCX-2000-23); see also 
Securities Exchange Act Release No. 45077 (November 19, 2001), 66 FR 
59280 (November 27, 2001) (SR-PCX-2001-39) (eliminating all 
references to fractional pricing from its rules).
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    The text of the proposed rule change is available at the PCX and at 
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 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 III 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
    On June 8, 2000, the Commission issued an order (``Order'') that 
provided a framework for the national securities exchanges and the 
National Association of Securities Dealers, Inc. (collectively 
``Participants'') to convert quotation pricing in equity securities and 
options from fractions to decimals.\4\ The Order required that: (i) 
Participants submit studies analyzing how decimal conversion affects 
systems capacity, liquidity, and trading behavior; and (ii) 
Participants submit rule filings that individually establish the MPV 
for each market.
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    \4\ See Securities Exchange Act Release No. 42914 (June 8, 
2000), 65 FR 38010 (June 19, 2000).
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    In complying with the Order, the Participants submitted to the 
Commission on July 26, 2000, the Decimals Implementation Plan for the 
Equities and Options Markets \5\ and successfully completed the 
phasing-in of decimal pricing in all equity securities and options. In 
connection with the full implementation, the Exchange modified its 
rules to include pricing in decimal format with cross-references to 
fractional pricing. This was done to allow the Exchange to trade, 
during the phase-in, some securities in decimals and some in fractions. 
The Exchange also established an MPV scheme for each market (equities 
and options) and submitted its study of the results on September 10, 
2001.\6\ The Exchange completed its transition to decimal pricing by 
eliminating references to fractional

[[Page 12075]]

pricing.\7\ The Exchange now proposes to permanently adopt the rules, 
previously noticed by the Commission, with no change.
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    \5\ See letter from Dennis L. Covelli, Vice President, New York 
Stock Exchange, Inc. to Annette Nazareth, Director, Division of 
Market Regulation, Commission, dated July 25, 2000.
    \6\ See The Pacific Exchange, Inc. Report on Decimal Trading 
(September 10, 2001).
    \7\ See supra note 3.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act \8\ in general, and furthers the 
objectives of section 6(b)(5) of the Act \9\ in particular, in that it 
is designed to facilitate transactions in securities, to promote just 
and equitable principals of trade, and 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.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    (A) by order approve such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 the filing will also be 
available for inspection and copying at the principal offices of the 
Exchange. All submissions should refer to File No. SR-PCX-2002-04 and 
should be submitted by April 8, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-6450 Filed 3-15-02; 8:45 am]
BILLING CODE 8010-01-P