[Federal Register Volume 69, Number 53 (Thursday, March 18, 2004)]
[Notices]
[Pages 12887-12888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6106]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49410; File No. SR-PCX-2004-14]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Time for Entering Orders Eligible for the Closing Auction

March 12, 2004.
    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 March 3, 2004, the Pacific Exchange, Inc. (``PCX'' or ``Exchange''), 
through its wholly-owned subsidiary PCX Equities, Inc. (``PCXE'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I and II below, which 
Items have been prepared by the PCX. The PCX filed the proposal 
pursuant to Section 19(b)(3)(A) under the Act,\3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ The PCX has asked the Commission to waive the 30-day 
operative delay. See Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX proposes to amend paragraph (d)(2)(B) of PCXE Rule 7.34, 
``Trading Sessions,'' to permit Users to enter Market-on-Close Orders 
(``MOC Orders''),\6\ Limit-on-Close Orders (``LOC Orders''),\7\ and 
Limited Price Orders beginning at 6:30 a.m. (Pacific Time) rather than 
4:30 a.m. (Pacific Time). The text of the proposed rule change appears 
below. Deletions are in brackets; additions are italicized.
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    \6\ PCXE Rule 7.31(dd) defines a Market-on-Close Order as a 
``Market Order that is to be executed only during the Closing 
Auction.''
    \7\ PCXE Rule 7.31(ee) defines a Limit-on-Close Order as a 
``Limited Price Order that is to be executed only during the Closing 
Auction.''
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Trading Sessions

    Rule 7.34(a)-(c)--No change.
    (d)Orders Permitted in Each Session.
    (1)--No change.
    (A)-(H)--No change.
    (2) During the Core Trading Session:
    (A)--No change.
    (B) Users may enter Market-on-Close Orders, Limit-on-Close Orders, 
and Limited Price Orders beginning at [4]6:30 am (Pacific Time) and 
concluding at 1:00 pm (Pacific Time) for inclusion in the Closing 
Auction, except as provided in Rule 7.35(e)(2). Market-on-Close Orders 
and Limit-on-Close Orders are eligible for execution only during the 
Closing Auction. Market Orders are not eligible for execution in the 
Closing Auction.
    (C)--No change.
    (3)--No change.
    (e)-(f)--No change.

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 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 PCX, through its wholly-owned subsidiary PCXE, proposes to 
amend its rules governing the Archipelago Exchange (``ArcaEx''), the 
equities trading facility of PCXE, to modify the time for entering 
Closing Auction-eligible orders. The PCX notes that the Commission 
recently approved a PCX proposal that established a beginning time of 
4:30 a.m. (Pacific Time) for entering MOC Orders, LOC Orders, and 
Limited Price Orders for inclusion in ArcaEx's Closing Auction.\8\ As 
part of its efforts to enhance ease of participation on ArcaEx, the PCX 
seeks to delay the beginning time for entering such orders from 4:30 
a.m. (Pacific Time) to 6:30 a.m. (Pacific Time).
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    \8\ See Securities Exchange Act Release No. 48883 (December 4, 
2003), 68 FR 69748 (December 15, 2003) (order approving File No. SR-
PCX-2003-24).
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    According to the PCX, the Core Trading Session begins at 6:30 a.m. 
(Pacific Time). The PCX believes that Users may be confused by the 
current rule because an order could be eligible for the Closing Auction 
at a time when the PCX is still accepting orders eligible for the 
Opening Auction.\9\ The PCX

[[Page 12888]]

believes that delaying the beginning time for entering Closing Auction-
eligible orders to coincide with the Core Trading Session will 
alleviate any confusion that Users may have regarding the nature of 
their orders.
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    \9\ The PCX accepts orders eligible for the Opening Auction from 
5 a.m. (Pacific Time) until 6:30 a.m. (Pacific Time). Telephone 
conversation between Mai Shiver, Acting Director/Senior Counsel, 
PCX, and Yvonne Fraticelli, Special Counsel, Division of Market 
Regulation, Commission, on March 11, 2004.
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2. Statutory Basis
    The PCX believes that the proposal is consistent with Section 6(b) 
of the Act,\10\ in general, and Section 6(b)(5) of the Act,\11\ in 
particular, in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and to protect 
investors and the public interest. In addition, the PCX believes that 
the proposed rule change is consistent with Section 11A(a)(1)(B) of the 
Act,\12\ which states the Congressional finding that new data 
processing and communications techniques create the opportunity for 
more efficient and effective market operations.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78k-1(a)(1)(B).
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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 PCX has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \13\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\14\ Because the foregoing proposed rule change: (1) Does 
not significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) does not become operative for 30 days from the date of filing, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-
4(f)(6)(iii), the PCX provided the Commission with written notice of 
its intent to file the proposed rule change at least five business days 
prior to filing the proposal with the Commission or such shorter period 
as designated by the Commission.
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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) permits the Commission to designate a 
shorter time if such action is consistent with the protection of 
investors and the public interest. The PCX has requested that the 
Commission waive the 30-day operative delay specified in Rule 19b-
4(f)(6). In this regard, the PCX states that it believes that the 
proposal does not raise new regulatory issues and that it will 
eliminate confusion regarding Closing Auctions. The PCX also believes 
that its request to waive the 30-day operative delay is consistent with 
the protection of investors and the public interest and that good cause 
exists, including the PCX's need to maintain competition and 
efficiency.
    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposed rule change is designed to minimize potential 
confusion regarding the entry of MOC Orders, LOC Orders, and Limited 
Price Orders for inclusion in the Closing Auction by delaying the time 
for entering such orders until 6:30 a.m. (Pacific Time).\15\ In this 
regard, the Commission notes that the PCX believes that its current 
rule may confuse Users because it permits the entry of orders eligible 
for the Closing Auction at a time when the PCX is still accepting 
orders eligible for the Opening Auction.\16\ The Commission believes 
that the proposal appears to be reasonably designed to help to address 
this concern by permitting the entry of orders eligible for the Closing 
Auction beginning at 6:30 a.m. (Pacific Time) rather than 4:30 a.m. 
(Pacific Time). For this reason, the Commission believes that waiving 
the 30-day operative delay is consistent with the protection of 
investors and the public interest, and the Commission designates the 
proposal to be operative upon filing with the Commission.
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    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
    \16\ The PCX accepts orders eligible for the Opening Auction 
from 5:00 a.m. (Pacific Time) until 6:30 a.m. (Pacific Time). See 
note 9, supra.
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    At any time within 60 days of the filing of such 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether it 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-
2004-14. The 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 hardcopy 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 at 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-2004-14 and should be 
submitted by April 8, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-6106 Filed 3-17-04; 8:45 am]
BILLING CODE 8010-01-P