[Federal Register Volume 69, Number 95 (Monday, May 17, 2004)]
[Notices]
[Pages 27965-27966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-11053]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49671; File No. SR-PCX-2004-32]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Amending the Designated Options Examination Authority Fee

May 7, 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 15, 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 the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 
by changing the Designated Options Examination Authority (``DOEA'') fee 
charged to its members. The text of the proposed rule change is 
available at the Commission and the PCX.

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 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
    In 2003, the Exchange filed a proposed rule change that allowed the 
Exchange to assess a $2000/month DOEA fee in order to recover the 
Exchange's costs of DOEA examinations for which it would be 
responsible.\3\ At the time the Exchange set DOEA fee, it contemplated 
that it would conduct some of the examinations itself and would 
contract with the NASD to conduct other examinations. For that reason, 
the Exchange adopted a flat fee of $2000/month based upon the 
preexisting $2000/month Designated Examination Authority (``DEA'') fee. 
The Exchange anticipated that the costs of the examinations, whether 
conducted by the NASD or by the Exchange, would be about the same as 
the costs of the DEA examinations.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 47577 (March 26, 
2004), 68 FR 16109 (April 2, 2003) (File No. SR-PCX-2003-03).
---------------------------------------------------------------------------

    The Exchange has relied exclusively on the NASD to conduct its DOEA 
examinations and as a result, believes it is appropriate to amend its 
Schedule of Fees and Charges to change its DOEA fee from $2000/month to 
a fee that would be a pass through of the costs that the Exchange pays 
the NASD for conducting DOEA examinations plus a 17% administrative 
charge. The PCX believes that since the current DOEA fee applies to all 
firms, even to smaller firms that conduct largely equities business, 
but also do occasional options trades for their public customers, 
assessing a flat fee for all firms regardless of the number of 
Registered Representatives that they maintain, is inequitable. The 
Exchange represents that the 17% percent administration fee that it 
proposes to charge relates directly to costs actually incurred by the 
Exchange in the administration of this program.
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) of the Act,\5\ in 
particular, in that it provides for the equitable allocation of 
reasonable fees among its members.
---------------------------------------------------------------------------

    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

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 were neither solicited nor received with respect 
to the proposed rule change.

[[Page 27966]]

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \6\ and Rule 19b-4(f)(2) \7\ 
thereunder, because it changes a fee imposed by the Exchange. 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.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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);
     Send an e-mail to [email protected]. Please include 
File Number SR-PCX-2004-32 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-2004-32. 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 20549-0609. 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-
2004-32 and should be submitted on or before June 7, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-11053 Filed 5-14-04; 8:45 am]
BILLING CODE 8010-01-P