[Federal Register Volume 69, Number 91 (Tuesday, May 11, 2004)]
[Notices]
[Pages 26202-26203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10634]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49656; File No. SR-PCX-2004-41]


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

May 5, 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 April 30, 2004, 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 
Items have been prepared by 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 Exchange is proposing to amend its Schedule of Fees and Charges 
for Exchange Services in order to rebate the fees charged to Lead 
Market Makers (``LMMs'') when they use the intermarket options linkage 
(``Linkage'') to send a Principal Acting as Agent (``P/A'') Order \3\ 
to another options exchange (an ``away market'').
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    \3\ A ``P/A Order'' is an order for the principal account of a 
market maker that is authorized to represent customer orders, 
reflecting the terms of a related unexecuted customer order for 
which the market maker is acting as agent. See section 2(16) of the 
Plan for the Purpose of Creating and Operating an Intermarket Option 
Linkage.
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    The text of the proposed rule change is available at the offices of 
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 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 purpose of this proposed rule change is to rebate the fees for 
PCX LMMs who trade P/A Orders executed through Linkage at away markets. 
Currently, when a PCX LMM sends a P/A Order through Linkage to an away 
market, the LMM pays transaction costs to execute the order at both the 
PCX and the away market center. The Exchange believes that fees have 
placed an unnecessary burden on the PCX LMMs and have created a 
disincentive to use Linkage. In order to encourage the use of Linkage 
and to remove some of the financial burden placed on PCX LMMs that use 
Linkage, the PCX is proposing to rebate the fees for PCX LMMs that send 
P/A Orders through Linkage to away markets. Specifically, the Exchange 
is proposing to rebate the LMM for the transaction and comparison 
charges incurred on the subsequent execution of customer

[[Page 26203]]

orders that have been routed to and received an execution on another 
exchange through Linkage. Fees will be rebated based on the aggregate 
market maker transaction and aggregate market maker comparison charge 
calculated at month-end.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with section 
6(b) of the Act,\4\ in general, and section 6(b)(4),\5\ in particular, 
in that it provides for the equitable allocation of dues, fees and 
other charges among its members and other persons using its facilities 
for the purpose of accessing the National Best Bid or Offer by using 
the Linkage on behalf of a customer order.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 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

    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

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the PCX, it has become effective 
pursuant to section 19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) 
\7\ thereunder. At any time within 60 days after 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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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 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. 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-2004-41 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.
    All submissions should refer to File Number SR-PCX-2004-41. 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 
Exchange. 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-
2004-41 and should be submitted on or before June 1, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 04-10634 Filed 5-10-04; 8:45 am]
BILLING CODE 8010-01-P