[Federal Register Volume 69, Number 190 (Friday, October 1, 2004)]
[Notices]
[Pages 58989-58991]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2449]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50448; File No. SR-PCX-2004-43]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment Nos. 1 and 2 Thereto by Pacific Exchange, Inc. 
Relating to Proposed Listing Fee Schedule for Structured Products

September 24, 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 May 11, 2004 the Pacific Exchange, Inc. (``PCX'' or ``Exchange''), 
through its subsidiary, PCX Equities, Inc. (``PCXE''), 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 PCXE. On August 9, 2004, the Commission received 
Amendment No. 1 to the proposed rule change.\3\ On August 23, 2004, the 
Commission received Amendment No. 2 to the proposed rule change.\4\ 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\ See letter from Tania Blanford, Regulatory Policy, PCX, to 
Nancy J. Sanow, Assistant Director, Division of Market Regulation 
(``Division''), Commission, dated August 5, 2004 (``Amendment No. 
1''). Amendment No. 1 replaced and superseded the original filing in 
its entirety. In Amendment No. 1, PCX added a definition of 
``structured products'' to the proposal and made other clarifying 
changes.
    \4\ See letter from Tania Blanford, Regulatory Policy, PCX, to 
Nancy J. Sanow, Assistant Director, Division, Commission, dated 
August 20, 2004 (``Amendment No. 2''). In Amendment No. 2, made a 
minor typographical correction to its proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    The PCX is proposing to amend its Schedule of Fees and Charges 
(``Schedule'') in order to adopt new listing fees for listing 
structured products on the PCXE and traded on the Archipelago Exchange 
(``ArcaEx''), a facility of the PCXE. The PCX proposes to implement 
these fees retroactive for listings and listing applications pending as 
of April 1, 2004. The PCX also proposes to add a definition of 
structured product in PCXE Rule 5.1(b)17. The text of the proposed rule 
change is available at the Office of the Secretary of the Exchange and 
at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, PCX 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. 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, through its wholly owned subsidiary, PCXE, proposes to 
adopt new listing fees specifically for structured products listed on 
the PCXE and traded on ArcaEx.\5\ The proposed fees include a non-
refundable application processing fee, a one-time initial listing fee, 
and an annual maintenance fee based on the number of products listed 
with PCXE.\6\
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    \5\ Structured products are derived from and/or based on a 
single security or securities, a basket of stocks, an index, a 
commodity, debt issuance and/or a foreign currency, among other 
things. Structured products include index and equity linked notes, 
term notes and units comprised of equity and/or debt securities.
    \6\ The remaining portions of the current listing fees (Company 
Name Change Fee, Change in Par Value Fee, Substitute Initial Listing 
Fee, and Additional Shares Listing Fee) will continue to apply to 
structured products. Telephone conversation between Leah Mesfin, 
Special Counsel, Division, Commission, and Tania J. Blanford, Staff 
Attorney, Regulatory Policy, PCX, on September 16, 2004.
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    The PCX believes there are several reasons to adopt a fee schedule 
specifically for structured products. First, PCXE's current listing 
fees do not explicitly provide for fees to list these types of 
securities. Accordingly, the amended Schedule would provide guidance 
and clarity to issuers and the public regarding the applicable fees. 
Second, in many cases, depending on the number of products listed, the 
proposed listing fees would substantially reduce the fees paid by 
issuers of structured products, enabling ArcaEx to compete more 
effectively for listings with other marketplaces.\7\
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    \7\ In addition to the described substantive changes, the 
Exchange also proposes to replace the `*' used reference the 
footnotes in the Schedule of Fees and Charges with sequential 
numbers for clarity.
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Summary of Current and Proposed Fee Changes

(a) Application Processing Fees
    Currently, issuers are charged a $500 application processing fee. 
This fee is non-refundable, although upon approval for listing, it is 
credited towards the initial listing fee. PCX proposes to retain an 
application processing fee, but proposes to charge either $500 or the 
initial listing fee, whichever is less.
(b) Initial Listing Fees
    Currently, the general one-time initial listing fees are based on 
whether the issue is also listed on the New York Stock Exchange, 
American Stock Exchange, or Nasdaq National Market. If an issue is 
dually listed, the initial listing fee is $10,000 per product; 
otherwise, the initial listing fee is $20,000 per product. These fees 
apply to each product listed, regardless of the number of products 
listed by the issuer.
    PCX proposes to adopt a one-time initial listing fee for structured 
products as follows: For the first initial public offering, the initial 
listing fee would be fixed at $20,000. For subsequent initial public 
offerings of structured products from the same issuer, the initial 
listing fee would be $1,000 for each additional listed issue, 
regardless of the number of products listed or if prior products 
remained listed. For structured products which are already listed on 
another exchange or marketplace, or are quoted on an inter-dealer 
quotation system, PCX proposes a fixed initial listing fee of $5,000 
for the first structured product listed by the issuer. For subsequent 
structured products listed by the same issuer that are already listed 
on another exchange or marketplace, or are quoted on an inter-dealer 
quotation system, PCX proposes to base the listing fee on

[[Page 58990]]

the number of products listed, as follows:

------------------------------------------------------------------------
                      Number of products                          Fee
------------------------------------------------------------------------
Two through 10...............................................     $1,000
11 through 100...............................................        500
101+.........................................................        100
------------------------------------------------------------------------

    This schedule would apply regardless of whether these products 
remain listed elsewhere.
(c) Annual Maintenance Fees
    Currently, the annual maintenance fees are fixed and based on 
whether the issue is also listed on the New York Stock Exchange, 
American Stock Exchange, or Nasdaq National Market. If dually listed, 
the maintenance fee is $1,000 per product; otherwise, the maintenance 
fee is $2,000 per product. These fees apply regardless of the number of 
products listed by the issuer. Annual maintenance fees are payable 
beginning in the first full calendar year of listing.
    The PCX proposes to adopt a fee schedule for annual maintenance 
fees specific to structured products as follows: $5,000 for the first 
product listed by an issuer, regardless of whether the product is 
listed elsewhere. For all additional structured products listed by the 
same issuer, the PCX proposes to base the annual maintenance fee on the 
number of products listed, as follows:

------------------------------------------------------------------------
                                                                Annual
                     Number of products                      maintenance
                                                                 fee
------------------------------------------------------------------------
Two through 10.............................................      $1,000
11 through 100.............................................         500
101+.......................................................         100
------------------------------------------------------------------------

    This schedule would apply regardless of whether these products 
remain listed elsewhere.
(d) Implementation
    The PCX proposes that these modifications become effective 
retroactive for all listings and listing applications pending as of 
April 1, 2004.
(e) Definition of Structured Products
    Finally, the PCX proposes to include a definition of structured 
products in PCXE Rule 5.1(b)(17). Structured products are derived from 
and/or based on a single security or securities, a basket of stocks, an 
index, a commodity, debt issuance and/or a foreign currency, among 
other things. Structured products include index and equity linked 
notes, term notes and units comprised of equity and/or debt securities. 
The PCX believes that providing a definition of structure products is 
appropriate to alleviate any confusion for issuers regarding the 
listing fees for structured products.
2. Statutory Basis
    The PCX believes that the proposal is consistent with Section 6(b) 
of the Act,\8\ in general, and Section 6(b)(4) of the Act,\9\ in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its members and issuers 
and other persons using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B.Self-Regulatory Organization's Statement on Burden on Competition

    The PCX 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

    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 self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, 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 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-2004-43 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-2004-43. 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-
2004-43 and should be submitted on or before October 22, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.

Exhibit A

Text of the Proposed Rule Change \11\
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    \11\ New text is italicized; deleted text is in [brackets].

[[Page 58991]]



           Schedule of Fees and Charges for Exchange Services
                      [PCX equities: listing fees]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Administrative Listing Fees:
    Application Processing Fee      $500.00
     1[*].
    Application Processing Fee for  $500.00 or the initial Structured
                                     Products\1\ listing fee, whichever
                                     is less.
    Company Name Change...........  $250.00.
    Change in Par Value...........  $250.00.
Initial [Original] Listing
 Fees2[*]:
    Common Stock, dually listed     $10,000.00.
     with the NYSE, AMEX or Nasdaq
     NM.
    Common Stock, not dually        $20,000.00.
     listed.
    Additional Classes of Common    $2,500.00.
     Stock.
    Preferred Stock, Warrants,      $2,500.00.
     Debit Instruments, Purchase
     Rights, Units.
Initial Listing Fees for
 Structured Products:
    Initial Public Offerings......  $20,000.00.
    Additional IPOs listed by the   $1,000.00.
     same issuer or ``family'' of
     fund.
    Structured Products multiply    $5,000.00.
     listed on another marketplace
     or quoted on an inter-dealer
     quotation system.
------------------------------------------------------------------------
1[*] This is a non-refundable, fixed charge for review of listing
  applications. Issues approved for listing will have this charge
  credited towards the Initial [Original] Listing fee.
2[*] The Initial [Original] Listing fees are fixed and are not charged
  by the number of shares listed.

    Additional Structured Products listed by same issuer:

------------------------------------------------------------------------
                Number of structured products                     Fee
------------------------------------------------------------------------
    2 through 10.............................................     $1,000
    11 through 100...........................................        500
    101+.....................................................        100
------------------------------------------------------------------------


Substitute Initial [Original] Listing Fee3[*]:
    Per Application (fixed charge)......................       $2,500.00
Additional Shares Listing Fee:
    Per share...........................................           .0025
    Minimum charge (per application)....................          500.00
    Maximum charge (per application)....................         7500.00
    Maximum charge (per year)...........................       15,000.00
Annual Listing Maintenance Fee (Payable January of each
 year following listing):
    For one issue, dually listed with the NYSE, AMEX or         1,000.00
     Nasdaq NM..........................................
    For one issue, not dually listed....................        2,000.00
    For each additional issue...........................          500.00
    Minimum (per year)..................................        1,000.00
    Maximum (per year)..................................        5,000.00
    For one Structured Product..........................       5,000.00
 
3[*] A Substitute Initial [Original] Listing would occur as a result of
  a change in state of incorporation, reincorporation under the laws of
  same state, reverse stock split, recapitalization, or similar events
  affecting the nature of a listed security.

    For each additional Structured Product listed by the same 
issuer:

------------------------------------------------------------------------
                                                                Annual
               Number of structured products                 maintenance
                                                                 fee
------------------------------------------------------------------------
    2 through 10...........................................      $1,000
    11 through 100.........................................         500
    101+...................................................         100
------------------------------------------------------------------------

Rules of PCX Equities, Inc.

Rule 5 Listings

Section 1. General Provisions and Definitions

* * * * *
    Rule 5.1(a)--No change.
    Rule 5.1(b)(1)-(16)--No change.
    (17) The term ``Structured Products'' means products that are 
derived from and/or based on a single security or securities, a 
basket of stocks, an index, a commodity, debt issuance and/or a 
foreign currency, among other things. Structured Products include 
index and equity linked notes, term notes and units comprised of 
equity and/or debt securities.
* * * * *
 [FR Doc. E4-2449 Filed 9-30-04; 8:45 am]
BILLING CODE 8010-01-P