[Federal Register Volume 68, Number 49 (Thursday, March 13, 2003)]
[Notices]
[Pages 12131-12133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5996]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47453; File No. SR-PCX-2003-07]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Changes in Marketing Fees Charged to Its Market Makers

March 6, 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 February 24, 2003, the Pacific Exchange, Inc. (``PCX'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II, and III below, which Items

[[Page 12132]]

have been prepared by the PCX.\3\ On February 28, 2003, PCX submitted 
Amendment No. 1 to the proposed rule change.\4\ 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\ The Commission notes that in its cover letter accompanying 
the proposed rule change, PCX inadvertently referred to the filing 
as SR-PCX-2003-06.
    \4\ See letter from Mai S. Shiver, Senior Attorney, Regulatory 
Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated February 28, 2003, received via 
facsimile on February 28, 2003. In Amendment No. 1, the PCX 
clarified that the marketing fee program applies only to option 
issues classified by the PCX as among the Top 250 issues, and 
described how the Top 250 issues are determined. In addition, the 
PCX supplemented its Schedule of Marketing Charges to include a list 
of 19 options issues for which the marketing fee has been reduced 
from $0.50 to $0.00.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX is proposing to change its marketing fee for certain 
options and to adopt new marketing fees for recently listed options. 
The text of the proposed rule change is available at the principal 
offices of the PCX 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 PCX included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it had 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 PCX recently adopted a payment-for-order-flow program under 
which it charges a marketing fee ranging from $0 to $1.00 per contract 
on a per-issue basis.\5\ The PCX segregates the funds from this fee by 
trading post and makes the funds available to Lead Market Makers 
(``LMMs'') for their use in attracting orders in the options traded at 
the posts. The PCX charges the marketing fees as set forth in its 
Schedule of Marketing Charges.
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    \5\ See Exchange Act Release No. 44830 (September 21, 2001), 66 
FR 49728 (September 28, 2001) (SR-PCX-2001-37).
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    The PCX is proposing to change the marketing fee for certain 
options as set forth in the Schedule of Marketing Charges beginning at 
the commencement of the March trade month and continuing until further 
notice. The PCX proposes to change only the amounts of the fees that it 
charges for transactions in the options that are included in the 
proposed Schedule of Marketing Charges.\6\ Any fees currently being 
charged for transactions in options that are not listed in this 
amendment to the Schedule of Marketing Charges would not be affected by 
the proposed rule change. The PCX believes that its proposed rule 
change is reasonable and equitable because it is designed to enable the 
PCX to compete with other markets in attracting options business.
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    \6\ The Commission notes that the PCX payment-for-order-flow 
program applies only to Top 250 issues. For purposes of the payment-
for-order-flow-program, the PCX recalculates the Top 250 issues 
quarterly, based upon volume statistics for the three-month period 
that began four months earlier. The PCX has updated its Schedule of 
Marketing Charges to identify the changes to the marketing fees that 
the PCX is charging for the March, April, and May 2003 trading 
months, as part of its payment-for-order-flow program. See Note 4 
supra.
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    The PCX's marketing fee program applies only to option issues 
classified by the PCX as a Top 250 issue. The PCX defines a Top 250 
issue as one of the 250 most actively traded option issues on a 
national basis. For each current month, the PCX's determination of 
whether an equity option ranks in the top 250 most active issues will 
be based on volume statistics for the three calendar months of trading 
activity beginning four months prior to the current month.
2. Statutory Basis
    The PCX believes that its proposal to amend its schedule of dues, 
fees and charges is consistent with Section 6(b) of the Act \7\ in 
general, and furthers the objectives of Section 6(b)(4) of the Act \8\ 
in particular, in that it is an equitable allocation of reasonable 
dues, fees, and other charges among PCX 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 PCX 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

    PCX neither solicited nor received written comments concerning the 
proposal.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the PCX, it has become effective 
pursuant to section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f) 
thereunder.\10\ 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. For purposes of 
calculating the 60-day abrogation period, the Commission considers the 
proposed rule change to have been filed on February 28, 2003, the date 
Amendment No. 1 was filed.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(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 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 
PCX. All submissions should refer to File No. SR-PCX-2003-07 and should 
be submitted by April 3, 2003.


[[Page 12133]]


    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. 03-5996 Filed 3-12-03; 8:45 am]
BILLING CODE 8010-01-P