[Federal Register Volume 69, Number 186 (Monday, September 27, 2004)]
[Notices]
[Pages 57742-57744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2385]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50410; File No. SR-PCX-2004-60]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc., 
Relating to Listing Standards for Income Deposit Securities (``IDS'')

September 17, 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 July 20, 2004, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission'' or 
``SEC'') the proposed rule change as described in items I, II and III 
below, which items have been prepared by PCX. The Exchange filed the 
proposed rule change pursuant to section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective 
upon filing.\5\ On September 17, 2004, the Exchange amended the 
filing.\6\ 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\ 15 U.S.C. 78s(b)(1).
    \4\ 17 CFR 240.19b-4.
    \5\ The Exchange asked the Commission to waive the five-day pre-
filing notice requirement and the 30-day operative delay. See 17 CFR 
240.19b-4(f)(6)(iii).
    \6\ See letter from Tania Blanford, PCX, to Nancy Sanow, 
Assistant Director, Division of Market Regulation, Commission, dated 
September 16, 2004 (``Amendment No. 1''). Amendment No. 1 clarified 
the proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Pacific Exchange, Inc. (``PCX'' or ``Exchange''), through its 
wholly owned subsidiary PCX Equities, Inc. (``PCXE''), proposes to 
amend its current listing requirements to specifically provide for the 
listing of units comprised of common stock and a debt security, 
sometimes referred to as income deposit securities (``IDS''). Under the 
proposed rule change, IDS units can be listed on the Exchange if each 
component of the IDS unit satisfies the initial listing standards 
applicable to that component. The text of the proposed rule change is 
below. Proposed new language is italicized.
* * * * *

PCX Equities, Inc.

Rule 5--Listings

* * * * *
General
    Rule 5.2(b)--No change.
    Commentary:
    .01 The Exchange will generally authorize the listing of a unit if 
each of the component parts meet the applicable requirements for 
listing as set forth in PCXE Rules 5.2(c) and 5.2(e)(1)-(2).
* * * * *
Immediate Public Disclosure of Material Information
    Rule 5.3(i)(2)--No change.
    (i)-(vii) No Change.
    (viii) Changes to the terms and conditions of a unit, such as 
changes to the terms and conditions of any of the components (including 
changes with respect to any original issue discount or other 
significant tax attributes of any component), or to the ratio of 
components within the unit. Such public notification should be as soon 
as practicable in relation to the effective date of the change, and 
should, at a

[[Page 57743]]

minimum, include release of an announcement to the national and 
business financial news-wire services. In addition, the issuer must 
also provide information regarding the terms and conditions of the 
components of the unit (including information with respect to any 
original issue discount or other significant tax attributes of any 
component), and the ratio of the components comprising the unit on its 
Web site, or if it does not maintain a Web site, include a description 
of the current terms and conditions of the components of the unit 
(including a description of any original issue discount or other 
significant tax attribute of any component) and the ratio of the 
components comprising the unit, in its annual report to unit holders.
* * * * *
Section 5. Maintenance Requirements and Delisting Procedures
Maintenance Requirements and Delisting Procedures
    Rule 5.5(a)--No Change.
    Commentary:
    .01-.03--No change.
    .04 In the case of units, the Exchange will normally consider 
suspending dealings in, or removing from the list, if any of the 
component parts do not meet the applicable listing standards as set 
forth in PCXE Rules 5.5(b) and 5.5(d). However, if one or more of the 
components is otherwise qualified for listing, that component may 
remain listed.
* * * * *

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 self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change. The text of these statements may be examined at 
the places specified in item IV below. The self-regulatory organization 
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 Exchange is proposing to amend its current listing requirements 
in order to provide clarity and transparency regarding the listing 
standards applicable to IDS units. The proposal is similar to listing 
standards that the Commission recently approved for the Nasdaq Stock 
Market, Inc., the New York Stock Exchange, Inc., and the American Stock 
Exchange, LLC.\7\
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    \7\ See Securities and Exchange Act Release No. 34-49746 (May 
20, 2004), 69 FR 30356 (May 27, 2004); Securities and Exchange Act 
Release No. 34-49515 (April 1, 2004), 69 FR 19592 (April 13, 2004); 
and Securities and Exchange Act Release No. 34-48666 (October 21, 
2003), 68 FR 61239 (October 27, 2003), respectively.
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    The Exchange proposes to amend PCXE Rule 5.2(b) to require that 
each component of an IDS unit satisfy the initial listing standards 
applicable to that component in order for the IDS to be eligible for 
initial listing. Thus, in the case of a unit consisting of a common 
stock and a bond, the common stock component would be required to 
satisfy the standards applicable to common stock and the bond would be 
required to satisfy the standards applicable to bonds.
    The PCX also proposes a conforming change to the Exchange's 
continued listing requirements. The Exchange proposes to amend PCXE 
Rule 5.5(a) to specify that the Exchange will consider suspending or 
de-listing any unit trading on the Exchange if any of the component 
parts do not meet the applicable listing standards. The proposed change 
to Rule 5.5(b), however, will make clear that if any particular 
component in a unit is otherwise qualified for listing, such component 
may remain listed on the Exchange.\8\
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    \8\ In contrast to a typical unit, which may trade for a limited 
amount of time (e.g., thirty days), then automatically separate into 
its component parts which will be listed and traded, an IDS unit can 
be expected to trade as a unit for an extended period of time, 
although holders can have certain rights to separate.
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    Further, the Exchange proposes to amend PCXE Rule 5.3(i)(2) to 
require the issuer of a unit to immediately publicize any change in the 
terms of a listed unit, such as changes to the terms and conditions of 
any of the components or to the ratio of the components within the 
unit. The issuer must also provide current information in this regard 
on its Web site, or if it does not maintain a Web site, in its annual 
report to unit holders. Changes that should be publicized would include 
those resulting from a stock split or an automatic exchange of one or 
more components of the unit (e.g., as a result of a secondary offering 
of units). The issuer would be expected to provide public disclosure as 
soon as practicable regarding the nature of and effective date of the 
change. For example, changes resulting from a stock split should be 
subject to prior disclosure, while changes with respect to original 
issue discount should be disclosed as soon as such information is 
available. The Exchange believes that this expanded disclosure 
requirement will help to ensure that sufficient information regarding 
the attributes of these securities is publicly available on a timely 
basis.
2. Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act,\9\ in general, and section 6(b)(5) of the Act,\10\ in 
particular, in that it will promote just and equitable principles of 
trade; facilitate transactions in securities, remove impediments to and 
perfect the mechanisms of a free and open market and national market 
system; and protect investors and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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 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 designated the proposed rule change as one that does 
not significantly affect the protection of investors or the public 
interest; impose any significant burden on competition; and become 
operative for 30 days from the date on which it was filed, or such 
shorter time as the Commission may designate.
    Therefore, the foregoing rule change has become effective pursuant 
to section 19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder.\12\ At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate the rule 
change if it appears to the Commission that the action is necessary or 
appropriate in the public interest, for the protection of investors, or 
would otherwise further the purposes of the Act.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).

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[[Page 57744]]

    In accordance with Rule 19b-4(f)(6)(iii) under the Act,\13\ this 
proposal does not become operative for 30 days after the date of its 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest. 
The Exchange has requested the Commission to waive the five-day pre-
filing notice requirement and the 30-day operative delay so the 
proposed rule change will become immediately effective. The Commission 
believes waiving the five-day pre-filing notice requirement and the 30-
day operative delay is consistent with the protection of investors and 
the public interest. The Commission notes that it recently approved 
similar proposals by Nasdaq, NYSE and Amex on which the Exchange's 
proposal is based.\14\ The Amex proposal was published for comment and 
the Commission received no comments on it.\15\ Finally, the Commission 
does not believe the Exchange's proposal raises any new regulatory 
issues.
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    \13\ 17 CFR 240.19b-4(f)(6)(iii).
    \14\ See Securities and Exchange Act Release No. 34-49746 (May 
20, 2004), 69 FR 30356 (May 27, 2004); Securities and Exchange Act 
Release No. 34-49515 (April 1, 2004), 69 FR 19592 (April 13, 2004); 
and Securities and Exchange Act Release No. 34-48666 (October 21, 
2003), 68 FR 61239 (October 27, 2003), respectively.
    \15\ See id.
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    For these reasons, the Commission designates the proposal to be 
effective and operative upon filing of the proposal with the 
Commission.\16\
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    \16\ For purposes only of accelerating 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-2004-60 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-2004-60. 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-
2004-60 and should be submitted on or before October 18, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E4-2385 Filed 9-24-04; 8:45 am]
BILLING CODE 8010-01-P