[Federal Register Volume 68, Number 249 (Tuesday, December 30, 2003)]
[Notices]
[Pages 75307-75308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-32036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48971; File No. SR-PCX-2003-69]


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

December 22, 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 December 12, 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 the Exchange 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 Exchange is proposing to amend the General Membership Fees and 
Floor, Market Maker and Remote Market Maker Fees portions of its 
Schedule of Fees and Charges (``Schedule''). The text of the proposed 
change to the fee schedule is available at the Exchange 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 had 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 General Membership Fees and 
Floor, Market Marker and Remote Market Maker portions of its Schedule 
in order to make a number of changes to member-related fees. According 
to the PCX, this proposal would increase existing fees to competitive 
levels of other self-regulatory organizations (``SROs'') and would 
introduce new fees to recover costs associated with processes requiring 
staff research and documentation, and reproduction of materials. Each 
proposed new fee or amendment is described below.
    a. Initial Membership Fee. The Exchange proposes to incorporate a 
flat fee of $1,500 for all seat activations. Currently, the PCX 
assesses each Member Organization an initial membership fee calculated 
as 5% of the average price of the last three membership seat sales, 
with an established per activation minimum of $1,000 and maximum of 
$4,000. The Exchange proposes to replace the calculation method with a 
simple flat fee of $1,500 for all Member Organizations and Nominees.\3\ 
The Exchange believes that restructuring this fee will provide much 
needed simplicity for the membership as well as Exchange staff. Also, 
this fee amount is substantially similar to the initial membership fee 
assessed by the Philadelphia Stock Exchange, Inc (``Phlx'').\4\
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    \3\ The initial seat activation fee would apply to each Member 
Organization as well as each Nominee to a Member Organization, since 
activation for each Nominee requires a separate administrative 
process.
    \4\ See Phlx Fee Schedule, Appendix A. The Phlx also assesses a 
$1,500 fee for initial memberships.
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    b. Statutory Disqualification. The Exchange proposes to amend the 
PCX statutory disqualification fee to $2,000 for all applications 
resulting in statutory disqualification proceedings. The PCX currently 
assesses $250 to process applications for approved status despite 
grounds for statutory disqualification. In order to bring this fee up 
to the competitive levels of other SROs, the Exchange proposes to 
increase the fee to $2,000 and assess the fee for all applications 
resulting in statutory disqualification proceedings.\5\ Hence, the fee 
will not be assessed unless the review of the application reveals that 
such a proceeding is necessary.
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    \5\ For example, the Chicago Board Options Exchange, Inc. 
(``CBOE'') assesses a $2,750 fee for applications resulting in 
statutory disqualification proceedings. See CBOE Fee Schedule.
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    c. Issue Relinquishment Request. The Exchange proposes to implement 
a new fee, in the amount of $100 per issue, to cover the cost 
associated with processing issue relinquishment requests from Lead 
Market Makers. Each issue relinquishment request, regardless of the 
number of issues, requires substantial Exchange resources, including 
dedicated staff time. Therefore, the Exchange believes it is necessary 
to implement a nominal fee of $100 per issue for cost recovery.
    d. Hard Copy Subscription--PCX Weekly Bulletin. The Exchange 
proposes to establish a $200 annual subscription fee applicable to all 
Members that elect to receive the PCX Weekly Bulletin in a hard copy 
format as opposed to e-mail.\6\ The purpose of this fee is twofold. 
First, the $200 annual fee is intended to offset the hard copy 
publication and dissemination cost, as well as the cost of dedicated 
staff time. Second, the Exchange believes that this fee will result in 
a positive effect in that it will promote the reduction of paperwork.
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    \6\ All Members and Member Firms are required to maintain an e-
mail address for communication with the Exchange. See PCX Rule 1.13.
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2. Statutory Basis
    The Exchange believes that the proposed rule change 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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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

    The PCX neither solicited nor received written comments with 
respect to the proposed rule change.

[[Page 75308]]

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 \9\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \10\ 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 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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    \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 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. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-PCX-2003-69. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in hard 
copy or by e-mail but not by both methods. 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 No. SR-PCX-2003-69 and should be 
submitted by January 20, 2004.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-32036 Filed 12-29-03; 8:45 am]
BILLING CODE 8010-01-P