[Federal Register Volume 67, Number 75 (Thursday, April 18, 2002)]
[Notices]
[Pages 19292-19293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9481]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45748; File No. SR-PCX-2002-15]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
Pacific Exchange, Inc. To Adopt a Volume Discount Program for Market 
Makers

April 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 February 28, 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 
Exchange. On April 11, 2002, the Exchange amended the proposal. \3\ The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the CHX under section 
19(b)(3)(A)(ii) of the Act, \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, as amended, 
from interested persons.
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    \1\ 15 U.S.C. 768s(b)(1).
    \2\ 17 CFR 240.196-4.
    \3\ See April 10, 2002 letter from Cindy L. Sink, Senior 
Attorney, Regulatory Policy, PCX, to Joseph Morra, Special Counsel, 
Division of Market Regulation, SEC and attachments (``Amendment No. 
1''). In Amendment No. 1, the PCX (1) provided a new Exhibit A that 
replaces and supersedes the Exhibit A that was filed with the 
original proposed rule change; and (2) clarified that the Volume 
Discount Program for Market Makers applies to all market makers, 
including Lead Market Makers, regardless of individual performance, 
whenever the overall volume on the Exchange reaches the designated 
amounts. For purposes of calculating the 60-day abrogation period, 
the Commission considers the period to have commenced on April 11, 
2002, the date the PCX filed Amendment No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to adopt a Volume Discount Program for Market 
Makers (``Program''). The Program is intended to provide PCX members 
with rebates once the PCX reaches volume levels that are adequate to 
sustain the operating and capital investment needs of the Exchange. The 
text of the proposed rule change is below. Additions are in italics.
PCX Options: Trade-Related Charges
* * * * *

Volume Discount Program

 
                                              Per contract reduction in
   PCX quarterly average daily contract       market maker transaction
                  volume                    charge for following quarter
 
449,000 or lower..........................  No reduction.
450,000 to 474,999........................  $0.01.
475,000 to 499,999........................  $0.02.
500,000 to 524,999........................  $0.03.
525,000 or higher.........................  $0.04.
 

* * * * *

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 its proposal and discussed any 
comments it received regarding the proposal. 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.

[[Page 19293]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt the Program, which is intended to 
provide PCX members with rebates once the PCX reaches volume levels 
that are adequate to sustain the operating and capital investment needs 
of the Exchange. The Program provides rate relief to market makers by 
reducing the market maker transaction charge once the PCX achieves 
certain volume thresholds. The volume thresholds will be calculated on 
a quarterly basis, and any rate reduction will be for the following 
quarter. The quarterly volume thresholds and corresponding quarterly 
market maker rate reduction for the following quarter are listed in 
Section I above.
    The first rate reduction will be for the second quarter of 2002, 
dependent on the PCX's quarterly average daily contract volumes for the 
first quarter of 2002. The volume discount is adjusted quarterly based 
on the PCX's prior quarter average daily contract volume. For example, 
if PCX volumes for the first quarter of 2002 average 475,000 contracts 
and the volumes for the second quarter average 425,000 contracts, the 
per contract reduction in the market maker transaction charge for the 
second quarter will be $0.02, even though second quarter volumes are 
below the level qualifying for a discount, and there will be no volume 
discount for the third quarter, regardless of PCX's third quarter 
volumes.
2. Statutory Basis
    The Exchange believes the proposal is consistent with the 
requirements of section 6(b) of the Act,\5\ in general, and furthers 
the objectives of Section 6(b)(4),\6\ in particular, in that it is 
designed to provide 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 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 Action

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\8\ because it involves a due, fee, or other charge. 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
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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 proposal 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-2002-15 and should be 
submitted by May 9, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-9481 Filed 4-17-02; 8:45 am]
BILLING CODE 8010-01-P