[Federal Register Volume 69, Number 208 (Thursday, October 28, 2004)]
[Notices]
[Pages 62928-62929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2874]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50579; File No. SR-PCX-2004-97]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the Pacific 
Exchange, Inc. Relating to an Amendment to the Automatic Opening 
Rotations Pilot Program

October 21, 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 October 14, 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 and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons and to approve the 
proposal, on an accelerated basis, for an additional six-month pilot 
expiring on March 31, 2005.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX proposes amending PCX Rule 6.64, Commentary .03 to extend its 
Automated Opening Rotation (``AOR'') pilot program for six months. The 
text of the proposed rule change is available at PCX 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 III below. The Exchange 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
    On September 30, 1999, the Commission approved a one-year pilot 
program for the operation of the Exchange's AOR System.\3\ On August 
21, 2000,\4\ August 13, 2001,\5\ June 10, 2002,\6\ and August 13, 
2003,\7\ the Commission granted one-year extensions to the pilot 
program. The latest pilot program extension expired on September 30, 
2004. The Exchange proposes to extend the AOR pilot program for an 
additional six months, retroactive from September 30, 2004 until March 
31, 2005.
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    \3\ See Securities Exchange Act Release No. 41970 (September 30, 
1999), 64 FR 54713 (October 7, 1999) and Securities Exchange Act 
Release No. 41824 (September 1, 1999), 64 FR 49263 (September 10, 
1999).
    \4\ See Securities Exchange Act Release No. 43187 (August 21, 
2000), 65 FR 52464 (August 29, 2000).
    \5\ See Securities Exchange Act Release No. 44688 (August 13, 
2001), 66 FR 43600 (August 20, 2001).
    \6\ See Securities Exchange Act Release No. 46055 (June 10, 
2002), 67 FR 41288 (June 17, 2002).
    \7\ See Securities Exchange Act Release No. 48333 (August 13, 
2003), 68 FR 50205 (August 20, 2003).
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    AOR provides a procedure to facilitate the execution of option 
orders at the opening by providing an electronic means of establishing 
a single price opening. The Exchange is requesting an additional 
extension of the AOR pilot program for six months, to March 31, 2005. 
The added time permits the Exchange to phase-in the Exchange's new 
trading platform for options, ``PCX Plus,'' on an issue-by-issue 
basis.\8\ As each issue is phased into PCX Plus, the Exchange will 
simultaneously phase-out such issue from the current AOR process. PCX 
Plus will eventually replace the AOR process in its entirety.\9\ Hence, 
the Exchange will not be seeking permanent approval of the AOR pilot 
program.\10\ Currently, the AOR pilot program is operating successfully 
and without any problems. Therefore, the Exchange believes that an 
extension of the pilot program is warranted.
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    \8\ See Securities Exchange Act Release No. 47838 (May 13, 
2003), 68 FR 27129 (May 19, 2003) (Order approving PCX Plus).
    \9\ The PCX represents that it will file a rule proposal to 
eliminate the AOR pilot program rule text in Rule 6.64(c) and 
Commentary .03 if the PCX Plus transition is completed before March 
31, 2005.
    \10\ The PCX Plus implementation began, gradually on an issue-
by-issue basis, on December 15, 2003, and is anticipated to become 
completely operative by December 31, 2004. The Exchange will not be 
seeking an additional extension of its AOR pilot program provided 
that the PCX Plus implementation is completed without significant 
delay.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) \11\ of the Act, in general, and furthers the 
objectives of section 6(b)(5),\12\ in particular, in that it is 
designed to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest.
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    \11\ 115 U.S.C. 78f(b).
    \12\ 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. 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 E-mail to [email protected]. Please include File 
Number SR-PCX-2004-97 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.

[[Page 62929]]

    All submissions should refer to File Number SR-PCX-2004-97. 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 
Exchange. 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-
2004-97 and should be submitted on or before November 18, 2004.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    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.\13\ In 
particular, the Commission finds that the proposed rule change is 
consistent with section 6(b)(5) of the Act, which requires that the 
rules of an exchange be designed to promote just and equitable 
principles of trade, remove impediments to and perfect the mechanism of 
a free and open market and a national market system, and protect 
investors and the public interest.\14\ The Commission believes that an 
extension of the pilot program for an additional six months should 
allow the Exchange to gradually phase-out the AOR process and to 
continue to phase-in PCX Plus on an issue-by-issue basis.
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    \13\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \14\ 15 U.S.C. 78f(b)(5).
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    Accordingly, the Commission finds good cause, pursuant to section 
19(b)(2) of the Act,\15\ for approving the proposed rule change prior 
to the thirtieth day after the date of publication of notice thereof in 
the Federal Register. The Commission recognizes that during the last 
extension of the pilot program, PCX has represented that the AOR pilot 
program has been operating successfully. The Commission believes that 
granting accelerated approval to extend the pilot program for an 
additional six months will allow PCX to continue, without interruption, 
the existing operation of its AOR pilot.
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    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-PCX-2004-97), is hereby 
approved on an accelerated basis, as a six-month pilot, scheduled to 
expire on March 31, 2005.
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    \16\ Id.

    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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E4-2874 Filed 10-27-04; 8:45 am]
BILLING CODE 8010-01-P