[Federal Register Volume 69, Number 62 (Wednesday, March 31, 2004)]
[Notices]
[Pages 17016-17017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7145]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49466; File No. SR-PCX-2004-21]


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

March 24, 2004.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on March 11, 2004, the Pacific Exchange, Inc. (``PCX'') 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 PCX. 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 Pacific Exchange, Inc., through its wholly owned subsidiary PCX 
Equities, Inc. (``PCXE''), proposes to amend its fee schedule for 
services provided to ETP Holders \3\ and Sponsored Participants \4\ 
that use the Archipelago Exchange (``ArcaEx'') by: (1) Imposing a per-
share transaction fee of $0.001 for round lot orders for NYSE listed 
securities that take liquidity from the ArcaEx Book, and (2) reducing 
the per-share transaction fee for round lot orders for NYSE listed 
securities routed outside the ArcaEx Book from $0.004 to $0.001. The 
fee schedule will remain unchanged for NYSE round lot orders residing 
in the ArcaEx Book that execute against inbound orders, NYSE odd lots, 
NYSE Cross Orders and credits, NASDAQ, Amex and other Tape B listed 
stocks. The text of the proposed rule change is set forth below. 
Proposed new language is in italics; proposed deletions are in 
[brackets].
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    \3\ See PCXE Rule 1.1(n) (defining ``ETP Holder'').
    \4\ See PCXE Rule 1.1(tt) (defining ``Sponsored Participant'').
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* * * * *

     Schedule of Fees and Charges for Exchange Services--Archipelago
                     Exchange: Trade Related Charges
Exchange Transactions:
    ETP Holders and Sponsored
     Participants \1\
        Round Lots
            NYSE Listed        [No transaction fee for orders executed
             Securities.        in the Book].
                               No transaction fee for orders executed in
                                the Book against Listed inbound orders.
                               $0.001 per share for orders that take
                                liquidity from the Book.
                               $0.001 per share for orders routed
                                outside the Book.
            Listed Securities  $0.003 per share (applicable to inbound
             (except NYSE       orders executed against orders residing
             Listed             in the Book).
             Securities.
            Nasdaq Securities  $0.003 per share (applicable to inbound
                                orders executed against orders residing
                                in the Book).
            Routing Service..  $0.004 per share (applicable to orders in
                                listed, except NYSE Listed Securities,
                                and Nasdaq securities routed away and
                                executed by another market center or
                                participant).
 
 
 \1\ These transaction fees do not apply to: (1) Directed Orders,
  regardless of account type, that are matched within the Directed Order
  Process; (2) Directed Orders for the account of a retail public
  customer that are executed partially or in their entirety via the
  Directed Order, Display Order, Working Order, and Tracking Order
  processes (however, any unfilled or residual portion of a retail
  customer's order that is routed away and executed by another market
  center or participant will incur this transaction fee); (3) orders
  executed in the Opening Auction and the Market Order Auction; (4)
  Cross Orders; (5) commitments received through ITS; and (6)
  participants in the Nasdaq UTP Plan that transmit orders via
  telephone.

* * * * *

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 proposes to modify the per-share round lot transaction fees 
for NYSE listed securities charged to ETP Holders and Sponsored 
Participants that execute trades on ArcaEx. The PCX currently does not 
charge ETP Holders

[[Page 17017]]

or Sponsored Participants a transaction fee when round lot orders in 
NYSE listed securities entered by the ETP Holder or the Sponsored 
Participant take liquidity from the ArcaEx Book. The PCX proposes to 
implement a $0.001 transaction fee for round lot orders that take 
liquidity from the ArcaEx Book. The PCX also proposes to reduce the 
transaction fee it charges for round lot orders in NYSE listed 
securities routed outside the ArcaEx book to $0.001 from $0.004 per 
share. The rationale for these changes is to make the pricing for 
executions on the ArcaEx in NYSE listed securities more competitive.\5\ 
The PCX evaluated the economics of modifying transaction fees for NYSE 
listed securities and determined that this was feasible and 
appropriate, given the costs involved and competitive concerns.
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    \5\ The PCX believes that the proposed rule change will cause 
its fees to be more closely comparable to those of its competitors, 
and states that the reduction in the routing fee will enhance its 
competitive position. Telephone conversation between Tania Blanford, 
Staff Attorney, Regulatory Policy, PCX, Bridget Farrell, Regulatory 
Analyst, Archipelago Holdings, LLC, and Tim Elliott, Regulatory 
Counsel, Archipelago Holdings, LLC, and Elizabeth MacDonald, 
Attorney, Division of Market Regulation (``Division''), Commission, 
March 16, 2004, and telephone conversation between Tania Blanford, 
Staff Attorney, Regulatory Policy, PCX, Tim Elliott, Regulatory 
Counsel, Archipelago Holdings, LLC, and Terri Evans, Assistant 
Director, Division, and Elizabeth MacDonald, Attorney, Division, 
March 22, 2004.
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2. Statutory Basis
    The PCX believes that the proposal is consistent with section 6(b) 
of the Act,\6\ in general, and section 6(b)(4) of the Act,\7\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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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

    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 foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4 
\9\ thereunder because it changes a fee imposed by the PCX. 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ See 15 U.S.C. 78(b)(3)(C).
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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-2004-21, and 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 may 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-2004-21 and should be 
submitted by April 21, 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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-7145 Filed 3-30-04; 8:45 am]
BILLING CODE 8010-01-P