[Federal Register Volume 67, Number 107 (Tuesday, June 4, 2002)]
[Notices]
[Pages 38539-38540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13870]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45986; File No. SR-PCX-2001-36]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment No. 
1 Thereto by the Pacific Exchange, Inc. Relating to Technical Changes 
to the PCX's Firm Quote Rule

May 28, 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 September 27, 2001, 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. PCX 
submitted Amendment No. 1 to the proposed rule change on May 21, 
2002.\3\ The Commission is granting accelerated approval to, and 
publishing this notice to solicit comments on, the proposed rule 
change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange proposes to delete the 
portion of the proposed rule change regarding displaying bids and 
offers and requests accelerated approval of the amended proposal. 
See letter from Mai S. Shiver, Senior Attorney, Regulatory Policy, 
PCX, to Nancy J. Sanow, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated May 20, 2002 
(``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to revise PCX Rule 6.86 regarding firm 
quotes. The text of the proposed rule change is below. Proposed new 
language is italicized.

] 5221      Firm Quotes

Rule 6.86(a) Applicability and Definitions
    (1)-(2) No change.
    (3) For purposes of this Rule, the term ``broker-dealer order'' and 
the term ``order,'' when used with respect to an order for the account 
of a broker-dealer, will include orders for ``foreign broker-dealers'' 
as defined in Rule 6.1(b)(31).

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 III 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
    In November 2000, the Commission amended Rule 11Ac1-1 under the Act 
(``Quote Rule'') \4\ to apply the Quote Rule to the options markets.\5\ 
In response, the Exchange amended its rules to adopt implementing 
provisions consistent with the Commission's approval of the Quote 
Rule.\6\ Now, the Exchange proposes to include foreign broker-dealers 
within its definition of broker-dealer for purposes of its members' 
firm quote obligation. The Exchange believes this proposed revision 
codifies the Commission's grant of exemptive relief already provided to 
options exchanges in allowing them to apply firm quote rules to foreign 
broker-dealers to the same extent as they do to U.S. broker-dealers.\7\ 
Accordingly, the Exchange believes that the proposed amendment is 
consistent with and supports the Commission's release regarding the 
Quote Rule.
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    \4\ 17 CFR 240.11Ac1-1.
    \5\ See Securities Exchange Act Release No. 43591 (November 17, 
2000), 65 FR 75439 (December 1, 2000).
    \6\ See Securities Exchange Act Release No. 44383 (June 1, 
2001), 66 FR 30959 (June 8, 2001) (order approving SR-PCX-2001-18).
    \7\ See letter from Annette L. Nazareth, Director, Division of 
Market Regulation, Commission, to Timothy H. Thompson, Assistant 
General Counsel, Chicago Board Options Exchange (April 2, 2001) 
(``Exemption Letter'').
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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),\9\ in particular, because it is designed 
to promote just and equitable principles of trade, prevent fraudulent 
and manipulative acts and practices, and 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

    Written comments on the proposed rule change were neither solicited 
nor received.

III. 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

[[Page 38540]]

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 No. SR-PCX-2001-36 and should be 
submitted by June 25, 2002.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\10\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\11\ which 
requires, among other things, that the rules of an exchange be designed 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market, and 
to protect investors and the public interest. Specifically, the 
Commission finds that, by incorporating the Exemption Letter into the 
PCX's rules, the proposed rule change is consistent with the 
Commission's grant of an exemption from the Quote Rule for responsible 
broker-dealers with regard to the handling of orders for the account of 
foreign broker-dealers.\12\
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    \10\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ See Exemption Letter, supra note 7.
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register. As noted above, the proposed 
rule change is consistent with the Commission's Exemption Letter.\13\ 
Accordingly, the Commission believes that no new regulatory issues are 
raised by PCX's proposed rule change. The Commission believes, 
therefore, that granting accelerated approved of the proposed rule 
change is appropriate and consistent with Section 19(b) of the Act.\14\
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    \13\ Id.
    \14\ 15 U.S.C. 78s(b).
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V. Conclusion

    It is Therefore Ordered, Pursuant to Section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-PCX-2001-36), as amended, is 
approved on an accelerated basis.
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-13870 Filed 6-3-02; 8:45 am]
BILLING CODE 8010-01-P