[Federal Register Volume 69, Number 181 (Monday, September 20, 2004)]
[Notices]
[Page 56259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2246]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50356; File No. SR-PCX-2004-29]


Self-Regulatory Organizations; The Pacific Exchange, Inc.; Order 
Granting Approval to Proposed Rule Change and Amendment Nos. 1 and 2 
Thereto To Amend the PCXE Minor Rule Plan and Recommended Fine Schedule 
To Add a Provision for Failure To Maintain Continuous, Two-Sided Q 
Orders in Those Securities in Which a PCXE Market Maker Is Registered 
To Trade

September 13, 2004.
    On April 14, 2004, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly owned subsidiary, PCX Equities, Inc. 
(``PCXE''), filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend PCXE Rule 10.12 to add new provisions 
(g)(3) and (i)(3). These provisions amend the PCXE Minor Rule Plan 
(``MRP'') and Recommended Fine Schedule (``RFS'') to add to the MRP and 
RFS the failure to maintain continuous, two-sided Q orders in those 
securities in which a PCXE market maker is registered to trade.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    On July 2, 2004, the PCX amended the proposed rule change.\3\ The 
Exchange again amended the proposed rule change on July 26, 2004.\4\ 
The proposed rule change, as modified by Amendment Nos. 1 and 2, was 
published for comment in the Federal Register on August 9, 2004.\5\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change, as amended.
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    \3\ See letter from Tania J.C. Blanford, Staff Attorney, 
Regulatory Policy, PCX, to Nancy J. Sanow, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated July 
1, 2004 (``Amendment No. 1''). Amendment No. 1 completely replaced 
and superseded the original filing.
    \4\ See letter from Tania J.C. Blanford, Staff Attorney, 
Regulatory Policy, PCX, to Nancy J. Sanow, Assistant Director, 
Division, Commission, dated July 23, 2004 (``Amendment No. 2''). 
Amendment No. 2 replaced footnote 2 (on page 3 of Amendment No. 1) 
and footnote 4 (on page 8 of Amendment No. 1).
    \5\ Securities Exchange Act Release No. 50131 (July 30, 2004), 
69 FR 48266.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\6\ The 
Commission finds specifically that the proposed rule change is 
consistent with section 6(b)(5) of the Act,\7\ in that it is designed 
to promote just and equitable principles of trade, facilitate 
transactions in securities, remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. The 
Commission also finds that the proposal is consistent with section 
6(b)(6) of the Act,\8\ which requires that members and persons 
associated with members be appropriately disciplined for violations of 
Exchange rules. Finally, the Commission finds the proposal is 
consistent with Rule 19d-1(c)(2) under the Act,\9\ which governs minor 
rule violation plans.
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    \6\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78f(b)(5).
    \8\ 15 U.S.C. 78f(b)(6).
    \9\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposal, the Commission in no way minimizes the 
importance of compliance with these rules, and all other rules subject 
to the imposition of fines under the MRP. The Commission believes that 
the violation of any self-regulatory organization's rules, as well as 
Commission rules, is a serious matter. However, in an effort to provide 
the Exchange with greater flexibility in addressing certain violations, 
the MRP provides a reasonable means to address rule violations that do 
not rise to the level of requiring formal disciplinary proceedings. The 
Commission expects that the Exchange will continue to conduct 
surveillance with due diligence, and make a determination based on its 
findings whether fines of more or less than the recommended amount are 
appropriate for violations of rules under the MRP on a case by case 
basis, or if a violation requires formal disciplinary action.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-PCX-2004-29) be, and it 
hereby is, approved, as amended.
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    \10\ 15 U.S.C. 78s(b)(2).

    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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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E4-2246 Filed 9-17-04; 8:45 am]
BILLING CODE 8010-01-P