[Federal Register Volume 67, Number 199 (Tuesday, October 15, 2002)]
[Notices]
[Pages 63722-63723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26155]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46617; File No. SR-PCX-2002-58]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. To 
Amend the Definition of ``Primary Only Order''

October 8, 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 16, 2002, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by PCX. PCX 
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).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary PCX Equities, 
Inc. (``PCXE''), proposes to amend its rules governing the Archipelago 
Exchange, the equities trading facility of PCXE, by amending the 
definition of ``Primary Only Order'' (``PO Order'') to permit ETP 
Holders and Sponsored Participants \5\ on the Archipelago Exchange to 
enter such orders at times other than just prior to the primary market 
opening. Under the proposal, PO Orders may be entered until a cut-off 
time determined from time to time by the PCXE. Below is the text of the 
proposed rule change. New text is in italics, while deletions appear in 
[brackets].
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    \5\ A ``Sponsored Participant'' means ``a person which has 
entered into a sponsorship arrangement with a Sponsoring ETP Holder 
pursuant to [PCXE] Rule 7.29.'' See PCXE Rule 1.1(tt).
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* * * * *

PCX Equities, Inc.

Rule 7
Equities Trading
Orders and Modifiers
    Rule 7.31(a)-(w)--No change.
    (x) Primary Only Order (PO Order). For exchange-listed securities 
only, a market order that is to be routed as a market[-on-open] order 
to the primary market [for participation in the primary market opening 
or re-opening process]. Such PO Orders may be entered until a cut-off 
time as determined from time to time by the Corporation.
    (1)-(2)--No change.
* * * * *

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

    In its filing with the Commission, 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
    The Archipelago Exchange (``ArcaEx'') commenced operations on March 
22, 2002, replacing the PCXE's traditional trading floor facilities. As 
part of its continuing review of the system's functionality and rules, 
the Exchange proposes to amend the definition of a PO Order to permit 
ETP Holders and Sponsored Participants (collectively ``Users'') on 
ArcaEx to enter such orders at times other than just prior to the 
primary market opening. Under the proposal, PO Orders may be entered 
until a cut-off time determined from time to time by the Exchange.
    As defined in Rule 7.31(x), a PO Order is a market order, for 
exchange-listed securities only, that is to be routed as a market-on-
open order to the designated primary market for participation in the 
primary market opening or re-opening process. A PO Order bypasses the 
order execution processes of the ArcaEx Book and is routed directly to 
the designated primary market. Currently, a PO Order entered for 
participation in the primary market opening must be entered before 6:28 
a.m. (Pacific Time). The Exchange proposes to modify the definition of 
a PO Order so they may be entered at times other than just prior to the 
primary market opening.
    The proposed rule change is intended to provide Users with more 
flexibility as to when they may route PO Orders to the designated 
primary market. The Exchange believes that by expanding the time during 
which PO Orders may be entered, Users will have the ability to use 
other markets other than ArcaEx as an alternative order destination 
when it suits the User's investment needs. Accordingly, the Exchange 
believes that the proposed rule change promotes a more efficient and 
effective market operation, and enhances the investment choices 
available to Users in the handling of their orders.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) \6\ of the Act, in general, and furthers the 
objectives of section 6(b)(5),\7\ in particular, in that it is designed 
to facilitate transactions in securities, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system.
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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 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 Exchange has designated the foregoing rule change as effecting 
a change that: (1) Does not significantly

[[Page 63723]]

affect the protection of investors or the public interest; (2) does not 
impose any significant burden on competition; and (3) by its terms does 
not become operative for 30 days from the date of filing. In addition, 
the Exchange provided the Commission with written notice of its intent 
to file the proposed rule change at least five days prior to the filing 
date. Accordingly, the proposed rule change has become effective 
pursuant to section 19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) 
thereunder.\9\ At any time within 60 days after the filing of the 
proposed rule change, the Commission may summarily abrogate the 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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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    PCX has also requested that the Commission waive the 30-day waiting 
period so that the proposed rule change may become operative 
immediately. The proposed Primary Only Order, as amended, promotes a 
more efficient and effective market operation, and enhances the 
investment choices available to Users in the handling of their orders. 
The Commission believes that it is consistent with the protection of 
investors and the public interest to waive the 30-day waiting 
period.\10\ For these reasons, the Commission designates the proposal 
as operative immediately.
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    \10\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
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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 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 No. PCX-2002-58 and should be 
submitted by November 5, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Margaret H. McFarland,
Deputy Secretary.
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    \11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 02-26155 Filed 10-11-02; 8:45 am]
BILLING CODE 8010-01-P