[Federal Register Volume 69, Number 183 (Wednesday, September 22, 2004)]
[Notices]
[Pages 56813-56816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-21276]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50374; File No. SR-PCX-2004-63]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the Pacific Exchange, Inc. 
Relating to a Proposed Listing Fee Schedule for Exchange Traded Funds 
and Closed-End Funds

September 14, 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 August 9, 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 PCX. The PCX submitted Amendment No. 1 
to the proposal on September 3, 2004.\3\ 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.
    \3\See letter from Tania Blanford, Regulatory Policy, PCX, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation, 
Commission, dated September 1, 2004, and accompanying Form 19b-4 
(``Amendment No. 1''). Amendment No. 1 replaced the original filing 
in its entirety.
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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''), is proposing to amend its Schedule of Fees and Charges 
(``Schedule'') in order to adopt new listing fees specifically for 
listing Exchange-Traded Funds (``ETFs'') and Closed-End Funds 
(``CEFs'') (collectively, ``Funds'') on the PCXE and trading on the 
Archipelago Exchange (``ArcaEx''), a facility of the PCXE.\4\ The PCX 
proposes to implement

[[Page 56814]]

these fees effective for listings, and listing applications pending, as 
of June 21, 2004. The text of the proposed rule change appears below; 
proposed additions are italicized.
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    \4\ ETFs include unit investment trusts, portfolio depository 
receipts and trust issued receipts designed to track the performance 
of the broad stock or bond market, stock industry sector, and U.S. 
Treasury and corporate bonds, among other things. CEFs are a type of 
Investment Company registered under the Investment Company Act of 
1940 that offers a fixed number of shares. Their assets are 
professionally managed in accordance with the CEF's investment 
objectives and policies, and may be invested in stocks, fixed income 
securities or a combination of both.
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* * * * *

           Schedule of Fees and Charges for Exchange Services
                      [PCX equities: listing fees]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Administrative Listing Fees: *
    Application Processing Fee.........  $500.00
    Funds..............................  $500.00 for all applications to
                                          list Fund(s) submitted at the
                                          same time by a Fund issuer or
                                          ``family,'' regardless of the
                                          number of Funds to be listed
                                          \1\
    Company Name Change................  $250.00
    Change in Par Value................  $250.00
Original Listing Fees: **
    Common Stock, dually listed with     $10,000.00
     the NYSE, AMEX or Nasdaq NM.
    Common Stock, not dually listed....  $20,000.00
    Additional Classes of Common Stock.  $2,500.00
    Preferred Stock, Warrants, Debit     $2,500.00
     Instruments, Purchase Rights,
     Units.
    Funds..............................  $20,000 for the first Fund
                                          listed by a Fund issuer or
                                          ``family;'' no fee for
                                          subsequent additional Funds
                                          listed by the same Fund issuer
                                          or ``family''.
------------------------------------------------------------------------
* This is a non-refundable, fixed charge for review of listing
  applications. Issues approved for listing will have this charge
  credited towards the Original Listing Fee or, if the Fund issuer of
  ``family'' is not subject to an original listing fee, towards the
  applicable annual maintenance fee(s) due for the Fund or Funds listed.
 
\1\ Fund ``families'' are those with a common investment advisor or
  investment advisors, which are ``affiliated persons'' as defined under
  the securities laws. A ``family'' also includes trust-issued receipts
  such as Holding Company Depositary Receipts (known as HLDRSSM) that
  have a common initial depositor or initial depositors that are
  ``affiliated persons'' as defined under the securities laws.
** The Initial Listing fees are fixed and are not charged by the number
  of shares listed.

* * * * *

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Additional Shares Listing Fee:
 \2\
    Per share....................  $.0025
    Minimum charge (per            $500.00
     application).
    Maximum charge (per            $7500.00
     application).
    Maximum charge (per year)....  $15,000.00
Annual Listing Maintenance Fee
 (Payable January of each year
 following):
    For one issue, dually listed   $1,000.00
     with the NYSE, AMEX or
     Nasdaq NM.
    For each additional issue....  $500.00
    Minimum (per year)...........  $1,000.00
    Maximum (per year)...........  $5,000.00
For Funds:
 
      Aggregate Total Shares               Annual Maintenance Fee
           Outstanding
 
Less than 10 million.............  $5,000
10 million to less than 30         $10,000
 million.
30 million to less than 50         $15,000
 million.
50 million to less than 100        $20,000
 million.
100 million to less than 250       $30,000
 million.
250 million to less than 500       $40,000
 million.
500 million to less than 750       $50,000
 million.
750 million to less than One       $60,000
 billion.
Greater than One billion.........  $80,000
------------------------------------------------------------------------
\2\ This fee does not apply to Funds.

* * * * *

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 modifications to 
the fee schedule. 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 adopt new listing fees specifically for Funds. 
The proposed fees include a non-refundable application processing fee, 
a one-time

[[Page 56815]]

original listing fee per Fund issuer or ``family,'' \5\ as defined, and 
an annual maintenance fee based on the aggregate total shares 
outstanding of the Funds listed by the same Fund issuer or ``family.'' 
The remaining portions of the current Schedule would continue to apply 
to Funds, except for the additional shares listing fee.
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    \5\ Fund ``families'' are those with a common investment advisor 
or investment advisors that are ``affiliated persons'' as defined 
under the securities laws. A ``family'' also includes trust-issued 
receipts such as Holding Company Depositary Receipts (known as 
HLDRSSM) which have a common initial depositor or initial 
depositors which are ``affiliated persons'' as defined under the 
securities laws.
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    The PCX believes there are several reasons to adopt listing fees 
specifically for Funds. First, PCXE's current Schedule does not 
explicitly provide for listing fees for these types of securities. 
Accordingly, the PCX believes the amended Schedule would provide 
guidance and clarity to issuers and the public regarding the 
appropriate applicable fees for Funds. Second, the PCX believes, in 
most cases, proposed fees would substantially decrease the listing fees 
that Fund issuers and Fund ``families'' would otherwise pay under the 
current Schedule. As such, the PCX believes the proposed fees would 
enable PCXE to compete more effectively for listings. The PCX also 
believes the lower proposed fees would also be beneficial for issuers. 
Finally, the PCX believes reduced listing fees for Funds would remove 
the financial impediment to listing created by high fees, thus 
providing Fund issuers and Fund ``families'' with a greater choice of 
listing venues.

Summary of Current and Proposed Fee Changes

(a) Application Processing Fees
    Currently, the Schedule provides for a $500 application processing 
fee, which applies generally to all listings applications including 
Funds. While this fee is non-refundable, it is credited towards the 
original listing fee upon approval for listing. PCX proposes to create 
an application processing fee specifically for Funds, which would allow 
a single application fee of $500 for applications submitted at the same 
time by a Fund issuer or Fund ``family,'' regardless of the number of 
Funds to be listed. Thus, a Fund issuer or Fund ``family'' which seeks 
to list multiple Funds at the same time would incur a total application 
fee of $500. Subsequent applications from the same Fund issuer or 
``family'' to list one or more Funds would incur a separate $500 
application fee at that time.
    Similar to the general application processing fee, the application 
processing fee for Funds would be non-refundable and credited towards 
the original listing fee, if any, upon approval of the listing, or, if 
the Fund issuer or ``family'' is not subject to an original listing 
fee, towards the applicable annual maintenance fee(s) due for the Fund 
or Funds listed.
(b) Original Listing Fees
    Currently, the original listing fee is based on whether a Fund or 
``family'' is dually listed on the New York Stock Exchange, Inc. 
(``NYSE''), the American Stock Exchange LLC (``Amex''), or Nasdaq 
National Market (``NNM''). Thus, if a Fund is dually listed, the 
original listing fee would be $10,000 per Fund; otherwise, the original 
listing fee would be $20,000 per Fund. This fee would apply to each 
individual Fund listed, regardless of the timing or number of Funds 
listed by an individual Fun issuer or ``family'' of funds.
    The PCX proposes a one-time original listing fee of $20,000 
specifically for the first Fund listed by a Fund issuer or Fund 
``family''--including those with one or more Funds listed as of June 
21, 2004--would not incur an original listed fee, regardless of whether 
one or more previously listed Funds are no longer listed on PCXE.
    This proposed fee would apply regardless of whether the Fund(s) 
lists in conjunction with an initial public offering, transfers from 
another marketplace, concurrently lists on another marketplace, or is 
listed on another exchange or market.
(c) Annual Maintenance Fees
    Currently, the annual maintenance fees are fixed and based on 
whether the Fund is dually listed on the NYSE, Amex, or NNM. If a Fund 
is dually listed, the maintenance fee would be $1,000 per Fund; 
otherwise, the maintenance fee would be $2,000 per Fund. These fees 
apply regardless of the number of Funds listed by the issuer. Moreover, 
annual maintenance fees are not incurred in the year of listing; 
rather, they are payable beginning in the first full calendar year 
following the year of listing.
    The PCX proposes to adopt annual maintenance fees specifically for 
Funds based on the aggregate total shares outstanding of the Funds 
listed by the same Fund issuer or Fund ``family,'' as follows:

------------------------------------------------------------------------
                                                               Annual
            Aggregate total shares outstanding               maintenance
                                                                 fee
------------------------------------------------------------------------
Less than 10 million......................................        $5,000
10 million to less than 30 million........................        10,000
30 million to less than 50 million........................        15,000
50 million to less than 100 million.......................        20,000
100 million to less than 250 million......................        30,000
250 million to less than 500 million......................        40,000
500 million to less than 750 million......................        50,000
750 million to less than One billion......................        60,000
Greater than One billion..................................        80,000
------------------------------------------------------------------------

    As previously stated, annual maintenance fees would be assessed 
beginning in the first full calendar year following the year of 
listing. The aggregate total shares outstanding would be calculated 
based on the total shares outstanding as reported by the Fund issuer or 
Fund ``family'' in its most recent periodic filing with the Commission 
or other publicly available information. For example, if a single Fund 
issuer or ``family'' listed ten Funds during calendar year 2001 with an 
aggregate of 120 million shares outstanding, and subsequently listed a 
single Fund in 2002 with 130 million shares outstanding, then listed a 
single Fund in 2003 with 400 million shares outstanding, that issuer 
would not incur an annual maintenance fee for 2001, but would incur 
annual maintenance fees of $30,000 for 2002 (based on an aggregate of 
120 million total shares outstanding), $40,000 for 2003 (based on an 
aggregate of 250 million total shares outstanding) and $50,000 for 2004 
(based on an aggregate of 650 million total shares outstanding). Annual 
maintenance fees would not be pro-rated or reduced for Funds that 
delist for any reason.
    The annual maintenance fees would apply regardless of whether any 
of these Funds are listed elsewhere.
(d) Implementation
    The PCX proposes that these proposed fees become effective 
retroactive for all listings, and listing applications pending, as of 
June 21, 2004.
2. Statutory Basis
    The Exchange believes that the proposal, as amended, 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

[[Page 56816]]

other charges among its members and other persons using its facilities.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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 Fee Schedule Modifications 
and Timing for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. By order approve the proposed modifications, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 e-mail to [email protected]. Please include File 
No. SR-PCX-2004-63 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 No. SR-PCX-2004-63. 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 communication 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, 450 Fifth Street, 
NW., Washington, DC 20549-0609. Copies of such filing will also 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 No. SR-PCX-
2004-63 and should be submitted on or before October 13, 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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-21276 Filed 9-21-04; 8:45 am]
BILLING CODE 8010-01-M