[Federal Register Volume 67, Number 221 (Friday, November 15, 2002)]
[Notices]
[Pages 69283-69284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29042]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46784; File No. SR-PCX-2002-68]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. To 
Amend Its Schedule of Fees and Charges To Increase the User Transaction 
Credit for Certain Transactions in American Depositary Receipts

November 7, 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 October 8, 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 November 5, 2002, the Exchange filed 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 Peter D. Bloom, Director, Policy 
Development, PCX to Rebekah Liu, Special Counsel, Division of Market 
Regulation, Commission, dated November 5, 2002. In Amendment No. 1, 
the Exchange corrected the fee schedule attached as Exhibit A to the 
rule filing to accurately reflect that existing underlined text 
would be double-underscored. Amendment No. 1 contained no 
substantive changes to the fee schedule.
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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 fee schedule to increase the user 
transaction credit for ETP Holders and Sponsored Participants who 
provide liquidity in exchange-listed American Depositary Receipts 
(``ADRs'') that are traded on the Archipelago Exchange, the equities 
trading facility of PCXE. The text of the proposed rule change is 
available at the Exchange 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 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 is to amend the Exchange's 
fee schedule by increasing the level of the transaction credit paid to 
ETP Holders \4\ and Sponsored Participants \5\ (collectively ``Users'') 
who provide liquidity in exchange-listed ADRs that are traded on the 
Archipelago Exchange (``ArcaEx'').
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    \4\ See PCXE Rule 1.1(n).
    \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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    Currently, Users who provide liquidity in ADRs by entering into the 
ArcaEx Book \6\ resting limit orders that are subsequently executed 
against incoming marketable orders, earn a credit of $0.001 per share. 
The Exchange proposes to increase the level of the transaction credit 
for ADRs from $0.001 to $0.002 per share. The increased credit of 
$0.002 is the same amount that is currently applied to orders that 
provide liquidity in Exchange-Traded Funds. This credit is intended to 
create additional incentives to Users to provide liquidity in ADRs that 
are traded on the ArcaEx facility.
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    \6\ ArcaEx maintains an electronic file of orders, called the 
ArcaEx Book, through which orders are displayed and matched. The 
ArcaEx Book is divided into four components, called processes--the 
Directed Order Process, the Display Order Process, the Working Order 
Process, and the Tracking Order Process. See PCXE Rules 7.36 and 
7.37 for a detailed description of these order execution processes.
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2. Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\7\ in general, and Section 6(b)(4)\8\ of the Act in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 foregoing rule change establishes or changes a due, fee, or 
other charge and, therefore, has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\10\ At any time within 60 days of the filing of such 
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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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 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

[[Page 69284]]

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 at the 
Commission's Public Reference Room. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-PCX-2002-68 and 
should be submitted by December 6, 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).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-29042 Filed 11-14-02; 8:45 am]
BILLING CODE 8010-01-P