[Federal Register Volume 68, Number 193 (Monday, October 6, 2003)]
[Notices]
[Pages 57721-57722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25259]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48569; File No. SR-PCX-2003-52]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to the Exchange's Designated Examining Authority Fee Exemption

September 30, 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 September 24, 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. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend the regulatory fee portion of 
its Schedule of Fees and Charges (``Fees'')

[[Page 57722]]

in order to revise its Designated Examination Authority (``DEA'') Fee 
exemption. The text of the proposed rule 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 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 Exchange is proposing to amend the regulatory fee portion of 
its Fees in order to revise the DEA Fee exemption. The Exchange 
currently charges a DEA fee in order to recover costs associated with 
regulation relative to those DEA member firms that do not conduct a 
certain portion of their trading activity on the PCX. The Exchange 
requires all traders to pay an initial registration fee of $75 per 
trader and an annual fee thereafter of $250 per trader. In addition, a 
$2,000 per month examination fee applies to firms for whom the PCX is 
the DEA. For firms that conduct a substantial portion of their business 
on the Exchange floor, however, these costs are deemed to be offset by 
contract revenue. Thus, the Exchange allows an exemption to those 
member organizations that can demonstrate that at least 25% of their 
income was derived from on-floor activities.
    The Exchange seeks to make a minor amendment to the existing DEA 
Fee exemption. The revised DEA Fee exemption will allow an exemption 
for any PCX Registered Floor Broker or Marker Maker \3\ that effects at 
least 25% of all securities transactions, as measured in contract or 
share volume, on the PCX Floor or any other PCX Options trading 
facility, including PCX Plus. The Exchange believes that this amendment 
more accurately reflects the application of the exemption and 
references the Exchange's new trading platform, PCX Plus. The Exchange 
states that the underlying purpose of the exemption, recovery of costs 
\4\ associated with providing regulatory services to off-floor trading 
firms that do not conduct their trading activity on the Exchange, 
remains unchanged.
---------------------------------------------------------------------------

    \3\ Pursuant to PCX Rule 6.1(c)(2), the term ``Market Maker'' 
includes Lead Market Maker, Remote Market Maker, Floor Market Maker 
and Supplemental Market Maker.
    \4\ These include costs related to advising firms on financial 
reporting requirements and compliance with PCX and Commission rules. 
There are also extensive travel costs and more complex regulation 
related to such firms.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\5\ in general, and Section 6(b)(4) of the Act,\6\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\8\ because it establishes or changes a due, fee, or other 
charge imposed by the Exchange. At any time within 60 days after the 
filing of the 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.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 such filing will also be 
available for inspection and copying at the principal office of the 
PCX. All submissions should refer to file number SR-PCX-2003-52 and 
should be submitted by October 27, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-25259 Filed 10-3-03; 8:45 am]
BILLING CODE 8010-01-P