[Federal Register Volume 69, Number 200 (Monday, October 18, 2004)]
[Notices]
[Pages 61425-61426]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2702]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50508; File No. SR-PCX-2004-86]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to Require 
Financial/Operations Principals of PCX OTP Firms To Successfully 
Complete the Series 27 Examination

October 8, 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 September 30, 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 Exchange. PCX 
filed this proposal pursuant to Section 19(b)(3)(A) \3\ of the Act and 
Rule 19b-4(f)(6) \4\ thereunder, which renders the proposal effective 
upon filing with the Commission.\5\ 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\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)
    \5\ The PCX provided the Commission with written notice of its 
intent to file this proposed rule on September 15, 2004. See 
September 15, 2004 letter from Steven B. Matlin, Regulatory Policy, 
PCX, to Nancy J. Sanow, Assistant Director, Division of Market 
Regulation, Commission.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX is proposing to amend PCX Rule 4.5(a) to require all 
financial/operations principals of PCX OTP Firms to successfully 
complete the National Association of Securities Dealers, Inc.'s Limited 
Principal--Financial and Operations examination (``Series 27 
Examination''). The text of the proposed rule change is below. Proposed 
new language is in italics; proposed deletions are in brackets.
    3723 Reports To Be Filed by Certain OTP Holders and OTP Firms
    Rule 4.5(a). Unless the Exchange determines otherwise, every OTP 
Holder or OTP Firm, except as otherwise provided in Rule 4.7, shall 
file with the Exchange the reports prescribed by this Section. Each OTP 
Holder or OTP Firm subject to Exchange Act Rule 15c3-1 shall designate 
a Financial/Operations Principal. The duties of a Financial/Operations 
Principal shall include taking appropriate actions to assure that the 
OTP Holder or OTP Firm complies with applicable financial and 
operational requirements under the Rules and the Exchange Act, 
including but not limited to those requirements relating to the 
submission of financial reports and the maintenance of books and 
records. Each Financial/Operations Principal is required to 
successfully complete the Financial and Operations Principal 
Examination (Series 27 Exam). Each Financial/Operations Principal 
designated by an OTP Holder or OTP Firm shall be registered in that 
capacity with the Exchange in a form and manner prescribed by the 
Exchange. A Financial/Operations Principal of an OTP Holder or OTP Firm 
may be a full-time employee of the OTP Holder or OTP Firm, or with the 
prior written approval of the Exchange, may be a part-time employee or 
independent contractor of the OTP Holder or OTP Firm. All OTP Holders 
and OTP Firms shall be in compliance with this Rule by March 31, 2005.
    Rule 4.5(b)-(f)-No Change.
* * * * *

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 its proposal and discussed any 
comments it received regarding the proposal. 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 Exchange is proposing to amend PCX Rule 4.5(a) to require all 
financial/operations principals of PCX OTP Firms to successfully 
complete the Series 27 Examination. PCX believes that requiring these 
individuals to successfully complete the Series 27 Examination will 
ensure that those individuals who prepare the financial statements for 
PCX OTP Firms will be sufficiently qualified to prepare such 
statements. PCX also believes that it will also bring the PCX 
qualifications to perform such functions up to date with

[[Page 61426]]

the requirements of other self-regulatory organizations.\6\
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    \6\ See, e.g., Chicago Board Options Exchange Rule 3.6A.(a) 
Financial/Operations Principal.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \7\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \8\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanism of a free and open market and a national market system.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\ At any time within 60 days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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-2004-86 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-2004-86. 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 Room. 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-2004-86 and should be submitted on or before 
November 8, 2004.

    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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Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-2702 Filed 10-15-04; 8:45 am]
BILLING CODE 8010-01-P