[Federal Register Volume 70, Number 26 (Wednesday, February 9, 2005)]
[Notices]
[Pages 6914-6915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2478]


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SECURITIES AND EXCHANGE COMMISSION

(Release No. 34-51125; File No. SR-PCX-2005-15)


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Pacific Exchange, Inc. Relating To Primary Only Orders

February 2, 2005.
    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 February 1, 2005, the Pacific Exchange, Inc. (``PCS'' and 
``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 PCX. 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.
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1. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change.

    The PCX, through its wholly-owned subsidiary PCX Equities, Inc. 
(``PCXE''), proposed to amend its PCXE Rule 7.31(x) to provide that the 
Primary Only Order (``PO Order'') may apply to Nasdaq securities traded 
on the Archipelago Exchange (``ArcaEx'') facility, and may be either 
market or limit orders. The test of the proposed rule change is 
available on the PCX's Web site (http://www.pacificex.com), at the 
PCX's Office of the Secretary and at the Commission's Public Reference 
Room.

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 the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The PCX has prepared summaries, set forth in Section 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
    As part of its continuing efforts to enhance participation on the 
ArcaEx facility, the PCX is proposing to amend PCXE Rule 7.31(x) to 
clarify that PO Orders may also apply to Nasdaq securities, and may be 
either market or limit orders.
    Currently, PCXE Rule 7.31(x) defines PO Orders as market orders 
that are routed to the primary market, and applies only to exchange-
listed securities.\3\ ArcaEx proposes to expand the PO Order 
functionality to include Nasdaq securities and modify Rule 7.31(x) 
accordingly. As such, the Exchange proposes to delete the language in 
PCXE Rule 7.31(x), which limits the PO Order functionality to exchange-
listed securities only and proposes minor changes to indicate that PO 
Orders may be either market or limit orders. Further, PO market orders 
in Nasdaq securities received prior to 6:28 a.m. PT will be marked 
``OO'' (On-Open \4\) and will be routed to Nasdaq for possible 
participation in Nasdaq's Opening Cross. The unexecuted shares that are 
sent back to ArcaEx after the Market Order Auction \5\ will be 
processed as regular market orders in the Core Session as described in 
PCXE Rule 7.37. Any PO Market orders marked OO that are sent back to 
ArcaEx before ArcaEx conducts the Market Order Auction will be 
cancelled back to the customer.
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    \3\ The Exchange currently interprets and will continue to 
interpret under this proposal the term ``primary market'' as the 
market which has the authority to declare a regulatory halt.
    \4\ ``On Open'' or ``OO'' is a marking recognized by the Nasdaq 
stock market as an order type executable only during Nasdaq's 
Opening Cross. Further, market orders sent with an ``OO'' designator 
are treated as market on-open orders by Nasdaq.
    \5\ See PCXE Rule 7.35.
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    The Exchange believes that implementing these changes will

[[Page 6915]]

provide investors and ETP Holders \6\ with greater opportunities for 
executing orders on the opening. Further, the Exchange believes that 
the proposal is merely a minor technical change to the existing PO 
Order type to enable this functionality for Nasdaq securities and to 
expand its applicability to limit orders.
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    \6\ See PCXE Rule 1.1(n).
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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, in that it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principals of trade, to foster 
cooperation and coordination with persons engaged in facilitating 
transactions in securities, and to remove impediments to and perfect 
the mechanisms 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 changes 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 Exchange consents, the Commission will:
    A. By order approve the proposed modifications, 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-2005-15 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-2005-15. 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-
2005-15 and should be submitted on or before March 2, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-2478 Filed 2-8-05; 8:45 am]
BILLING CODE 8010-01-M