[Federal Register Volume 70, Number 24 (Monday, February 7, 2005)]
[Notices]
[Pages 6489-6490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-471]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51094; File No. SR-PCX-2004-43]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Amendment Nos. 1 and 2 Thereto by the Pacific Exchange, Inc. 
and Notice of Filing and Order Granting Accelerated Approval to 
Amendment No. 3 Thereto Relating to a Proposed Listing Fee Schedule for 
Structured Products

January 28, 2005.

I. Introduction

    On May 11, 2004, the Pacific Exchange, Inc. (``PCX'') submitted to 
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 its fee 
schedule to provide separate listing fees for structured products. PCX 
filed Amendment No. 1 to the proposed rule change on August 9, 2004.\3\ 
PCX filed Amendment No. 2 to the proposed rule change on August 23, 
2004.\4\
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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 Amendment No. 1 replaced and superseded the original filing in 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, PCX made 
a minor typographical correction to its proposed rule text.
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    The proposed rule change and Amendment Nos. 1 and 2 were published 
for comment in the Federal Register on September 24, 2004.\5\ The 
Commission received no comment letters on the proposed rule change and 
Amendment Nos. 1 and 2. PCX filed Amendment No. 3 to the proposed rule 
change on December 9, 2004.\6\ This order approves the proposed rule 
change and Amendment Nos. 1 and 2, and issues notice of filing of, and 
approves on an accelerated basis, Amendment No. 3.
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    \5\ See Securities Exchange Act Release No. 50448 (October 1, 
2004), 69 FR 58989.
    \6\ In Amendment No. 3, PCX added definitions for exchange-
traded funds and closed-end funds and added a statement to the fee 
schedule to clarify that the term ``Funds'' refers to exchange-
traded funds and closed-end funds in order to properly distinguish 
Funds from Structured Products.
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II. Description of the Proposed Rule Change

    The PCX, through its wholly-owned subsidiary PCX Equities, Inc. 
(``PCXE''), has proposed to adopt new listing fees specifically for 
Structured Products listed and traded on the Archipelago Exchange. The 
proposed listing fees include a non-refundable listing application fee, 
initial listing fees, and annual maintenance fees for Structured 
Products. The proposal adds a definition of ``Structured Products'' \7\ 
to the PCXE rules to clarify which products would be assessed the 
proposed listing fees.
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    \7\ As modified by Amendment No. 3, Structured Products are 
defined as ``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'' and 
would include ``index and equity linked notes, term notes and units 
generally consisting of a contract to purchase equity and/or debt 
securities at a specified time.''
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    In Amendment No. 3 to the proposed rule change, PCX added 
definitions of ``Exchange-Traded Fund'' \8\ and ``Closed-End Fund'' \9\ 
to the PCXE rules and a definition of ``Funds'' \10\ to the PCXE fee 
schedule. Amendment No. 3 also modified the proposed definition of 
``Structured Products.'' Amendment No.

[[Page 6490]]

3 seeks to distinguish Structured Products from Funds and to further 
clarify the application of the different listing fees.
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    \8\ Amendment No. 3 defines Exchange-Traded Funds as ``unit 
investment trusts, portfolio depository receipts and trust issued 
receipts designed to track the performance of the broad stock or 
bond market, stock industry sector, and U.S. Treasury and corporate 
bonds, among other things.''
    \9\ Amendment No. 3 defines Closed-End Funds (``CEFs'') as ``a 
type of investment company registered under the Investment Company 
Act of 1940 that offers a fixed number of shares'' that ``are 
professionally managed in accordance with the CEF's investment 
objectives and policies, and may be invested in stocks, fixed income 
securities or a combination of both.''
    \10\ Amendment No. 3 provides that ``Funds'', as that term is 
used in the Fee Schedule, include Exchange-Traded Funds and Closed-
End Funds.
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III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment No. 3, including whether Amendment No. 3 
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 Room, 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-
2004-43 and should be submitted on or before February 28, 2005.

IV. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\11\ In particular, the Commission finds that the proposed 
rule change, as amended, is consistent with Section 6(b)(4) of the 
Act,\12\ which requires that a national securities exchange's rules 
provide 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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    \11\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \12\ 15 U.S.C. 78f(b)(4).
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    The Commission notes that the proposed rule change would enact a 
revised fee schedule to provide separate fees for the listing of 
structured products. The Commission also notes that the proposed fees 
would apply indiscriminately to all issuers of structured products. The 
Commission believes that the revised fee schedule should provide 
clarity to issuers regarding the appropriate fees applicable to 
structured products. Therefore the Commission believes that the 
proposed rule change, as amended, is consistent with the Act.
    The Commission finds good cause for accelerating approval of 
Amendment No. 3 prior to the thirtieth day after publication in the 
Federal Register. The Commission notes that the proposed rule change 
and Amendment Nos. 1 and 2 thereto were noticed for the full comment 
period and that no comments have been received on the proposal. The 
Commission further notes that Amendment No. 3 merely clarifies the 
proposal by adding definitions to its rules to codify the application 
of the various fees for the different derivative products. The 
Commission believes that accelerated approval should permit PCX to 
begin promptly to assess the new listing fees for structured products. 
For this reason, the Commission finds good cause exists, consistent 
with Section 19(b)(2) of the Act,\13\ to approve Amendment No. 3 on an 
accelerated basis.
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    \13\ 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,\14\ that the proposed rule change (SR-PCX-2004-43), as amended by 
Amendment Nos. 1 and 2, is hereby approved, and that Amendment No. 3 is 
hereby approved on an accelerated basis.
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    \14\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-471 Filed 2-4-05; 8:45 am]
BILLING CODE 8010-01-P