[Federal Register Volume 69, Number 76 (Tuesday, April 20, 2004)]
[Notices]
[Pages 21174-21176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8891]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49560; File No. SR-PCX-2004-23]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Pacific Exchange, Inc. Relating to Exchange Fees and Charges

April 13, 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 24, 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. On April 1, 2004, the PCX filed 
Amendment No. 1 to the proposed rule change, which replaces the 
original filing in its entirety.\3\ The PCX filed the proposal pursuant 
to Section 19(b)(3)(A) of the Act,\4\ and Rule 19b-4(f)(6) 
thereunder,\5\ 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 letter from Tania Blanford, Staff Attorney, Regulatory 
Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of 
Market Regulation (``Division''), Commission, dated March 31, 2004. 
In Amendment No. 1, the PCX redesignated the filing from a filing 
under subparagraph (f)(2) of Rule 19b-4 to a filing under 
subparagraph (f)(6) of Rule 19b-4, as well as made a technical 
correction to the rule text. The substance of Amendment No. 1 is 
incorporated in this notice.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX, through its wholly-owned subsidiary PCX Equities, Inc. 
(''PCXE''), proposes to amend its fee schedule for services provided to 
ETP Holders \6\ that use the Archipelago Exchange (``ArcaEx'') in order 
to correct a technical error in the fee schedule. The text of the 
proposed rule change, as amended, is set forth below. Proposed new 
language is in italics; proposed deletions are in [brackets].
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    \6\ See PCXE Rule 1.1(n) (defining ``ETP Holder'').
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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\
 
                                                 * * * * * * *
ARCHIPELAGO EXCHANGE: OTHER FEES AND CHARGES
 
                                                 * * * * * * *
[USER] ETP HOLDER TRANSACTION CREDIT
 
                                                  * * * * * * *
MARKET DATA REVENUE SHARING CREDIT \2\
Tape A Securities:
  Cross Order....................................................  50% tape revenue credit per qualifying trade
                                                                    (applicable to any Cross Order, as defined
                                                                    in PCXE Rule 7.31(s), where the ETP Holder
                                                                    [or Sponsored Participant] represents all of
                                                                    one side of the transaction and all or a
                                                                    portion of the other side).
Tape B Securities:
  Liquidity Provider Credit......................................  50% tape revenue credit per qualifying trade
                                                                    (applicable to limit orders that are
                                                                    residing in the Book and that execute
                                                                    against inbound marketable orders).
  Directed Order.................................................  50% tape revenue credit per qualifying trade
                                                                    (applicable to any market maker that
                                                                    executes against a Directed Order within the
                                                                    Directed Order Process, as defined in PCXE
                                                                    Rule 7.37(a)).
  Cross Order....................................................  50% tape revenue credit per qualifying trade
                                                                    (applicable to any Cross Order, as defined
                                                                    in PCXE Rule 7.31(s), where the ETP Holder
                                                                    [or Sponsored Participant] represents all of
                                                                    one side of the transaction and all or a
                                                                    portion of the other side.

[[Page 21175]]

 
  ``Drop Copy'' \3\ Processing Fee...............................  $0.001 per share (applicable to off-board
                                                                    trades in listed and Nasdaq securities)
 
\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.
\2\ For exchange-listed securities, an ETP Holder [User] that submits a Tracking Order instruction that
  subsequently matches against an inbound marketable order will not be entitled to receive the Liquidity
  Provider Credit.
\3\ A ``drop copy'' is an electronic report of a transaction for an ETP Holder's account that is executed on
  another market center and that has been prepared for informational purposes (e.g., Market Maker inventory
  tracking, surveillance audit trail). Market Maker transactions that are subject to this fee will not be
  eligible to receive the Market Maker Transaction Credit or [User] ETP Holder Transaction Credit.
* * * * * * *

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 is proposing to correct a technical error in the fee 
schedule by deleting all references to the term ``Sponsored 
Participant'' \7\ in the fee schedule. Pursuant to PCXE Rule 2.17, the 
PCX imposes certain dues, charges or fees upon an ETP Holder for the 
use of equipment or facilities or for services or privileges granted by 
the PCX. A Sponsored Participant may obtain authorized access to the 
ArcaEx by entering into a customer agreement with an ETP Holder.\8\ The 
PCX, however, does not impose any fees, dues or charges on the 
Sponsored Participant.
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    \7\ See PCXE Rule 1.1(tt) (defining ``Sponsored Participant'').
    \8\ See PCXE Rule 7.29.
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    Currently, the ``Exchange Transactions'' and ``Market Data Revenue 
Sharing Credit'' portions of the fee schedule incorrectly reference 
Sponsored Participants as entities billed or credited by the PCX.\9\ 
Thus, the PCX wishes to delete references to Sponsored Participants in 
the fee schedule at this time.
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    \9\ Telephone conversation between Tania Blanford, Staff 
Attorney, Regulatory Policy, PCX, and Elizabeth MacDonald, Attorney, 
Division, Commission, April 13, 2004.
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2. Statutory Basis
    The PCX believes that its proposal is consistent with Section 6(b) 
of the Act \10\ in general, and furthers the objectives of Section 
6(b)(5) of the Act \11\ in particular, in that it is designed to 
perfect the mechanisms of a free and open market and a national market 
system, and to protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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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 PCX has filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \12\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    Because the foregoing proposed rule change does not:
    (i) significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 
19b-4(f)(6) thereunder. 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.\14\ 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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    \14\ For the purposes of calculating the 60-day abrogation 
period, the Commission considers the proposed rule change to have 
been filed on April 1, 2004, the date the PCX filed Amendment No. 1.
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    The PCX has requested that the Commission waive the 30-day 
operative delay. The Commission believes waiving the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Such waiver will permit the PCX to correct a technical error 
in its fee schedule and accordingly clarify the fees charged for 
services provided to ETP Holders. For these reasons, the Commission 
designates the proposal to be effective and operative upon filing with 
the Commission.\15\
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    \15\ For purposes only of waiving the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment form 
(http://www.sec.gov/rules/sro.shtml); or
     Send an E-mail to [email protected]. Please 
include File Number SR-PCX-2004-23 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0609.

[[Page 21176]]

    All submissions should refer to File Number SR-PCX-2004-23. 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, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
PCX. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-PCX-
2004-23 and should be submitted on or before May 11, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-8891 Filed 4-19-04; 8:45 am]
BILLING CODE 8010-01-P