[Federal Register Volume 68, Number 161 (Wednesday, August 20, 2003)]
[Notices]
[Pages 50205-50206]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21306]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48333; File No. SR-PCX-2003-37]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2 by the 
Pacific Exchange, Inc. Relating to a One-Year Extension of the 
Automatic Opening Rotation Pilot Program

August 13, 2003.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 25, 2003, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. On 
August 4, 2003 and August 6, 2003, the Exchange filed amendments to the 
proposed rule change.\3\ The Exchange has designated the proposed rule 
change, as amended, as constituting a ``non-controversial'' rule change 
under paragraph (f)(6) of Rule 19b-4 under the Act.\4\ 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 letters from Tania J. Cho, Staff Attorney, Regulatory 
Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, dated August 1, 2003, replacing Form 
19b-4 in its entirety (``Amendment No. 1'') and August 6, 2003 
(``Amendment No. 2''). In Amendment No. 1, the PCX clarified the 
implementation and operative dates of PCX Plus and represented that 
it will not be seeking additional extension of the Automated Opening 
Rotation (``AOR'') pilot program provided that PCX Plus has been 
implemented without delay. The PCX also made minor technical 
corrections to a citation in its footnotes and in the rule text and 
changed its basis for filing the proposed rule change from Section 
19(b)(2) to Section 19(b)(3)(A)(iii) of the Act. In Amendment No. 2, 
the PCX changed its basis for filing the proposed rule change from 
Section 19(b)(3)(A)(iii) to Section 19(b)(3)(A) and Rule 19b-4(f)(6) 
of the Act and made minor technical corrections to a reference in 
its footnotes.
    \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 proposes to extend its AOR pilot program for one year 
until September 30, 2004. The text of the proposed rule change, as 
amended, is available at the Office of the Secretary, 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 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 parts of such 
statements.

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

1. Purpose
    On September 30, 1999, the Commission approved a one-year pilot 
program for the operation of the Exchange's AOR System.\5\ On August 
21, 2000,\6\ August 13, 2001,\7\ and June 10, 2002,\8\ the Commission 
granted one-year extensions to the pilot program. The pilot program is 
currently set to expire on September 30, 2003.
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    \5\ See Securities Exchange Act Release Nos. 41970 (September 
30, 1999), 64 FR 54713 (October 7, 1999) (approving one-year AOR 
pilot) and 41824 (September 1, 1999), 64 FR 49263 (September 10, 
1999) (in part, approving AOR for sixteen issues on a thirty-day 
pilot basis).
    \6\ See Securities Exchange Act Release No. 43187 (August 21, 
2000), 65 FR 52464 (August 29, 2000).
    \7\ See Securities Exchange Act Release No. 44688 (August 13, 
2001), 66 FR 43600 (August 20, 2001).
    \8\ See Securities Exchange Act Release No. 46055 (June 10, 
2002), 67 FR 41288 (June 17, 2002).
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    AOR provides a procedure to facilitate the execution of option 
orders at the opening by providing an electronic means of establishing 
a single price opening. The Exchange is requesting an additional 
extension of the AOR pilot program for one year, to September 30, 2004. 
The added time permits the Exchange to phase-in the Exchange's new 
trading platform for options, ``PCX Plus'', on an issue-by-issue 
basis.\9\ As each issue is phased into PCX Plus, the Exchange will 
simultaneously phase-out such issue from the current AOR process. PCX 
Plus will eventually replace the AOR process in its entirety.\10\ 
Hence, the Exchange will not be seeking permanent approval of the AOR 
pilot program.\11\ The Exchange believes that the AOR pilot program is 
operating successfully and without any problems and, on that basis, 
believes that a one-year extension of the pilot program is warranted.
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    \9\ See Securities Exchange Act Release No. 47838 (May 13, 
2003), 68 FR 27129 (May 19, 2003) (Order approving PCX Plus).
    \10\ The PCX represents that it will file a rule proposal to 
eliminate the AOR pilot program rule text in Rule 6.64, Commentary 
.03 if the PCX Plus transition is completed before September 30, 
2004.
    \11\ The PCX estimates that PCX Plus will be implemented 
gradually on an issue-by-issue basis beginning December 15, 2003, 
and is anticipated to become completely operative by June 30, 2004. 
The Exchange will not be seeking an additional extension of its AOR 
pilot program provided that the PCX Plus implementation is completed 
without significant delay.
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is 
consistent with Section 6(b) of the Act \12\ in general, and furthers 
the objectives of Section 6(b)(5)\13\ in particular, because it is 
designed to promote just and equitable principles of trade and, in 
general, to protect investors and the public interest.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 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, as 
amended, will impose any burden on competition

[[Page 50206]]

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, as amended, were 
neither solicited nor received.

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

    The proposed rule change, as amended, has been filed by the 
Exchange as a ``non-controversial'' rule change pursuant to Section 
19(b)(3)(A) of the Act \14\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\15\ Because the foregoing proposed rule change, as amended: 
(i) Does not significantly affect the protection of investors or the 
public interest; (ii) does not impose any significant burden on 
competition; and (iii) by its terms, does not become operative for 30 
days after the date of the filing, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6).\17\ The 
Exchange also provided the Commission with written notice of its intent 
to file the proposed rule change, along with a brief description and 
text of the proposed rule change, at least five business days prior to 
the date of the filing of the proposed rule change. At any time within 
60 days of the filing of such proposed rule change, as amended, 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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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6).
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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 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 Section. 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-2003-37 and should be submitted by September 10, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-21306 Filed 8-19-03; 8:45 am]
BILLING CODE 8010-01-P