[Federal Register Volume 68, Number 39 (Thursday, February 27, 2003)]
[Notices]
[Pages 9104-9105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4617]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47388; File No. SR-PCX-2003-01]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Determination of Top 120 and 250 Issues

February 21, 2003.
    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 27, 2003, 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 PCX. 
The Exchange 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\ 2 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6). The PCX requests that the Commission 
waive the 30-day operative delay. The PCX provided the Commission 
with notice of its intention to file this proposal on January 9, 
2003.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX proposes to amend PCX Rule 6.37(b)(5), PCX Rule 6.87(b), the 
PCX Schedule of fees, and RBO 02-08 in order to change the calculation 
period for determining the top 120 and top 250 issues. The text of the 
proposed rule change is available for inspection and copying in the 
Commission's Public Reference Room and at the principal office of the 
PCX.

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 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
    In evaluating the type and quality of issues traded on the 
Exchange, the Exchange ranks issues based upon the total national 
volume. A common benchmark that the Exchange uses is called ``top 120'' 
and ``top 250,'' indicating that equity option issues falling within 
these groups would qualify as being among the top 120 or top 250, 
respectively, of the most actively-traded equity option issues. Because 
the Exchange relies on the top 120 and top 250 rankings with respect to 
many of its processes, it believes it needs to define them in such a 
way as to provide greater accuracy and meaning to the point of 
reference. Currently, the Exchange defines ``top 120'' as:

for each current month, the Exchange's determination of whether an 
equity option ranks in the top 120 most active issues will be based on 
volume statistics for the one month of trading activity that occurred 
two months prior to the current month.

    The Exchange determines the top 250 rankings in the same manner. 
Accordingly, the current approach would use September's national equity 
option volumes to determine November's rankings.
    The Exchange represents that it has observed that volumes fluctuate 
from month to month and as a result, an issue may fall out of, or into, 
the top 120 or top 250 ranking somewhat sporadically. Moreover, the 
Exchange believes that evaluating the option volumes over a one-month 
period does not provide great accuracy in determining the long-term 
performance of an issue and its rank. Accordingly, the Exchange 
proposes to adopt a trailing three-month average, starting with the 
most currently completed calendar month, in order to determine the 
rankings of issues. For example, under the proposed rule change, the 
Exchange would determine its November ranking in October and base the 
ranking on the national volumes of the September, August and July trade 
months. Consistently, it would determine its December ranking in 
November and base it on the October, September and August national 
volumes.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with section 
6(b) of the Act,\5\ in general, and furthers the objective of section 
6(b)(5),\6\ in particular, because it is designed to promote just and 
equitable principles of trade, to remove impediments and to perfect the 
mechanism of a free and open market and a national market system, and 
in general, to protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 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 PCX represents that it submitted a draft of this filing, 
including the proposed new rule text, to the Commission on January 9, 
2003 in fulfillment of the five-day draft notice period of Rule 19b-
4(f)(6).\7\ The PCX has further designated that the proposed rule 
change: (1) Does not significantly affect the protection of investors 
or the public interest; (2) does not impose any significant burden on 
competition; and (3) does not become operative for 30 days after the 
date of filing, or such shorter time as the Commission may designated 
if consistent with the protection of investors and the public interest. 
Therefore, the proposed rule change has become effective immediately 
upon filing with the Commission pursuant to section

[[Page 9105]]

19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) thereunder.\9\
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    \7\ 17 CFR 240.19b-4(f)(6).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \10\ does not 
become operative until 30 days after the date of filing or such shorter 
time as the Commission may designate if such action is consistent with 
the protection of investors and the public interest. The PCX has 
requested that the Commission accelerate the implementation of this 
proposed rule change so that it may take effect before the 30-day 
period specified in Rule 19b-4(f)(6)(iii).\11\ The Commission believes 
that it is consistent with the protection of investors and the public 
interest to waive the 30-day period and to designate that the proposed 
rule change has become operative as of January 27, 2003, the date the 
PCX filed the proposal with the Commission.\12\
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    \10\ Id.
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ The Commission notes that it has considered the proposed 
rule's impact on efficiency, competition, and capital formation for 
the sole purpose of accelerating the operative date of the proposed 
rule change. 15 U.S.C. 78c(f).
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    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.

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 No. SR-PCX-2003-01 and should be 
submitted by March 20, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\.
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-4617 Filed 2-26-03; 8:45 am]
BILLING CODE 8010-01-P