[Federal Register Volume 69, Number 188 (Wednesday, September 29, 2004)]
[Notices]
[Page 58210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-21838]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50430; File No. SR-PCX-2004-78]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Approving a Proposed Rule Change Relating to Priority and Order 
Allocation Procedures for PCX Plus

September 23, 2004.
    On August 10, 2004, the Pacific Exchange, Inc. (``PCX'') 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 PCX Rule 
6.76 (Priority and Allocation Procedures of PCX Plus) to eliminate the 
requirement that inbound marketable Broker Dealer orders route to Floor 
Broker Hand Held Terminals in some trading scenarios in lieu of 
receiving immediate electronic executions and to eliminate Electronic 
Book Execution pursuant to PCX Rule 6.76(b)(4). The proposed rule 
change was published for comment in the Federal Register on August 19, 
2004.\3\ The Commission received no comments on the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 50191 (August 13, 
2004), 69 FR 51504.
---------------------------------------------------------------------------

    The Exchange proposes to amend PCX Rule 6.76 to allow Firm and Non-
OTP Holder Market Maker \4\ orders to immediately execute on PCX Plus. 
The PCX also proposes to remove the restrictions on an order entered by 
a Firm or Non-OTP Holder or OTP Firm Market Maker less than one minute 
before the inbound order. In addition, the Exchange proposes to 
eliminate the 40% participation limitation currently placed on a Firm, 
Non-OTP Holder or OTP Firm Market Maker for an inbound order that is 
not entirely filled. Finally, the PCX proposes to eliminate the 
Electronic Book Execution rules set forth in PCX Rule 6.76(b)(4) that 
prevent PCX Market Makers from immediately executing orders against the 
Consolidated Book.
---------------------------------------------------------------------------

    \4\ The term ``Non-OTP Holder Market Maker'' includes, but is 
not limited to, specialists, designated primary market makers, lead 
market makers, market makers, registered options traders, primary 
market makers and competitive market makers registered on an 
exchange other than the PCX. See PCX Rule 6.1(b)(35).
---------------------------------------------------------------------------

    After careful review, 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 \5\ 
and, in particular, the requirements of section 6(b) of the Act \6\ and 
the rules and regulations thereunder. The Commission finds that the 
proposed rule change is consistent with section 6(b)(5) of the Act,\7\ 
which requires that the rules of an exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to 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.
---------------------------------------------------------------------------

    \5\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Specifically, the Commission finds that, in eliminating 
restrictions which prevent Firm and Non-OTP Market Maker orders from 
immediately executing, the proposed rule changes should provide greater 
efficiencies in the marketplace. In particular, the Commission believes 
that allowing PCX Market Makers to immediately execute against the 
Consolidated Book by eliminating the Electronic Book Execution rules of 
PCX Rule 6.76.(b)(4) should improve the speed of executions at the PCX.
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-PCX-2004-78) be, and 
hereby is, approved.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-21838 Filed 9-28-04; 8:45 am]
BILLING CODE 8010-01-P