[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Notices]
[Pages 37188-37189]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15713]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48028; File No. SR-PCX-2003-26]


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

June 13, 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 May 30, 2003, the Pacific Exchange, Inc. (``PCX'') filed with the 
Securities and Exchange Commission the proposed rule change as 
described in Items I, II, and III below, which the PCX has prepared. 
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.
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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 change is available at 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

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.\3\ The PCX segregates the funds from this fee by 
trading post and makes

[[Page 37189]]

the funds available to LMMs for their use in attracting orders in the 
options traded at the posts. The PCX charges the marketing fees as set 
forth in the Schedule of Rates. The PCX's marketing fee program applies 
only to option issues classified by the PCX as the Top 250 issues. 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.
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    \3\ See Securities Act Release No. 44830 (September 21, 2001), 
66 FR 49728 (September 28, 2001) (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 Rates beginning at the 
commencement of the June 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 Rates. Any fees currently being charged for 
transactions in options that are not listed in this amendment to the 
Schedule of Rates 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. Only the amount of the 
fee is being changed.
Basis
    The PCX believes that the proposal is consistent with section 6(b) 
of the Act \4\ and section 6(b)(4) of the Act \5\ in particular in that 
it provides for the equitable allocation of reasonable fees among its 
members.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    The PCX neither solicited nor received written comments on the 
proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) thereunder \7\ 
because it changes the PCX fee schedule. At any time within 60 days 
after the filing of this 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 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 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 the 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-2003-26 and should 
be submitted by July 14, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-15713 Filed 6-20-03; 8:45 am]
BILLING CODE 8010-01-P