[Federal Register Volume 68, Number 208 (Tuesday, October 28, 2003)]
[Notices]
[Pages 61544-61545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27096]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48664; File No. SR-PCX-2003-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. and 
Amendment No. 1 To Exempt ETP Holders and Sponsoring ETP Holders From 
the Administrative Late Charges Related to Transaction Fees by the 
Archipelago Exchange

October 20, 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''), through its subsidiary, PCX Equities, Inc. (``PCXE''), 
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 October 10, 2003, the 
Exchange filed an amendment that entirely replaced the original rule 
filing.\3\ The PCX has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by the PCX under Section 
19(b)(3)(A)(ii) of the Act,\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, 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 October 9, 2003 letter from Tania J. Cho, Regulatory 
Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation, Commission, and attachment (``Amendment No. 1''). 
Amendment No. 1 replaces and supersedes the original proposed rule 
change in its entirety. For purposes of calculating the 60-day 
abrogation period, the Commission considers the period to have 
commenced on October 10, 2003, the date the PCX filed Amendment No. 
1. See section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through PCXE, proposes to amend the Schedule of Fees 
and Charges (``Schedule'') for the Archipelago Exchange (``ArcaEx'') to 
establish an exception to an administrative late charge applicable to 
ETP Holders and Sponsoring ETP Holders for failure to pay applicable 
dues, fees, or charges that are past due. 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 its proposal and discussed any 
comments it received regarding the proposal. 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 Exchange is proposing to amend ArcaEx's Schedule to establish 
an exception to an administrative late charge applicable to ETP Holders 
and Sponsoring ETP Holders who trade on ArcaEx for failure to pay dues, 
fees, or charges that are past due.
    Currently, ArcaEx \5\ assesses an administrative late charge to ETP 
Holders and Sponsoring ETP Holders that are substantially late in 
making payments to ArcaEx of dues, fees, fines or other charges.\6\ The 
purpose of this charge is to recover ArcaEx's costs in seeking to 
collect such payments when they are past due and to encourage ETP 
Holders and Sponsoring ETP Holders to make such payments in a timely 
manner. ArcaEx provides invoices and related notices to ETP Holders and 
Sponsoring ETP Holders as follows: An initial invoice is sent 
approximately five days after a given month in which dues, fees or 
other charges are accrued. If no payment is made on the invoice within 
one month, ArcaEx sends the ETP Holder or Sponsoring ETP Holder a 
``late'' notice on the tenth day of the month following the month in 
which the invoice was issued. Thereafter, if no payment is made by the 
twentieth of the month following issuance, ArcaEx sends a second 
``late'' notice with an administrative late charge. The amount of the 
late charge is $250.00 or 1.0 percent of the invoice amount (whichever 
is greater) if the ETP Holder or Sponsoring ETP Holder is late once 
within the previous twelve months; and $500.00 or 1.5 percent of the 
invoice amount (whichever is greater) if the ETP Holder or Sponsoring 
ETP Holder is late more than once within the previous twelve months.
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    \5\ With the exception of regulatory related fees and charges, 
for which the PCX administer, ArcaEx administers the billing and 
collection of all other fees and charges.
    \6\ See Securities Exchange Act Release No. 35757 (May 24, 
1995), 60 FR 28433 (May 31, 1995), (SR-PSE-95-15) (Notice of Filing 
and Immediate Effectiveness of the Administrative ``Late'' Charges). 
While this rule change in the Schedule has been operative since May 
13, 1995, due to a clerical error the Schedule was not updated 
internally at that time. Hence, the Schedule, to date, has not 
reflected the late charge. This administrative error has been 
corrected internally by the PCX's Finance Department.
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    ArcaEx is proposing to establish an exception that would eliminate 
the requirement to pay the administrative late charges related to 
transaction fees. The purpose of such an exception is for business 
reasons in that ArcaEx is seeking to promote a more competitive level 
to its ETP Holders and Sponsoring ETP Holders for conducting business 
on ArcaEx. The administrative late charge will continue to be applied 
to all other dues, fees or charges that are past due.
2. Statutory Basis
    The Exchange believes the proposal is consistent with Section 6(b) 
of the Act,\7\ in general, and Section 6(b)(4) of the Act,\8\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).

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[[Page 61545]]

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 \9\ and subparagraph (f)(2) of Rule 19b-
4\10\ thereunder, because it establishes or changes a due, fee, or 
other charge imposed by the Exchange. At any time within 60 days of 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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 number SR-PCX-2003-53 and should be 
submitted by November 18, 2003.

    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. 03-27096 Filed 10-27-03; 8:45 am]
BILLING CODE 8010-01-P