[Federal Register Volume 70, Number 39 (Tuesday, March 1, 2005)]
[Notices]
[Pages 10013-10015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-808]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51243; File No. SR-PCX-2004-130]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. 
Relating to Fees for Late FOCD Forms

February 23, 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 December 23, 2004, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly owned subsidiary PCX Equities, Inc. 
(``PCXE''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the self-
regulatory organization. The PCX has designated this proposal as one 
establishing or changing a due, fee, or other charge imposed by the PCX 
under Section 19(b)(3)(A)(ii) of the Act,\3\ which renders the proposal 
effective upon filing with the Commission. 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)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX proposes to amend the PCXE rules to adopt new fees for late 
Financial and Operational Compliance Department (``FOCD'') required 
forms. The text of the proposed rule change is below. Proposed new 
language is in italics. Proposed deletions are in brackets.

Rules of the Pacific Exchange, Inc.

Rule 11

Business Conduct

* * * * *

Prevention of the Misuse of Material, Nonpublic Information

    Rule 11.3(a) Every OTP Holder or OTP Firm must establish, maintain 
and enforce written policies and procedures reasonably designed, taking 
into consideration the nature of such OTP Holder or OTP Firm's 
business, to prevent the misuse of material, non-public information by 
such OTP Holder or OTP Firm or persons associated with such OTP Holder 
or OTP Firm. OTP Holders or OTP Firms for whom the Exchange is the 
Designated Examining Authority (``DEA'') that are required, pursuant to 
Rule 4.5, to file SEC form X-17A-5, with the Exchange on an annual or 
more frequent basis must file contemporaneously with the submission for 
the calendar year end ITSFEA compliance acknowledgments stating that 
the procedures mandated by this Rule have been established, enforced 
and maintained. Any OTP Holder or OTP Firm or Associated Person who 
becomes aware of a possible misuse of material, non-public information 
must promptly notify the Exchange's Options Surveillance Department.
    (b) Any OTP Holder or OTP Firm who fails to file a compliance 
acknowledgment form in a timely manner shall be subject to a late 
filing charge of $500.00 for each occurrence. Repeated or aggravated 
failure to file may be referred to the Enforcement Department for 
appropriate disciplinary action.
Commentary .01-.03--No change.
* * * * *

Disclosure of Financial Arrangements of OTP Holders

    Rule 11.11(a)--No change.

[[Page 10014]]

    (b) OTP Holders and OTP Firms with financial arrangements must 
submit to the Exchange notification of the initiation, modification or 
termination of such financial arrangements in a form, time and manner 
approved by the Exchange within ten business days of the effective date 
of such arrangements or within such shorter period of time as the 
Exchange may require. Any OTP Holder or OTP Firm who fails to file as 
such in a timely manner shall be subject to a late filing charge of 
$500.00 for each occurrence. Repeated or aggravated failure to file may 
be referred to the Enforcement Department for appropriate disciplinary 
action. [Failure to disclose the terms of such financial arrangements 
to the Exchange may result in disciplinary action.]
* * * * *

Rules of PCX Equities, Inc.

Rule 6

Business Conduct

* * * * *

Prevention of the Misuse of Material, Nonpublic Information

    Rule 6.3(a) Every ETP Holder must establish, maintain and enforce 
written policies and procedures reasonably designed, taking into 
consideration the nature of such ETP Holder's business, to prevent the 
misuse of material, non-public information by such ETP Holder or 
persons associated with such ETP Holder. ETP Holders for whom the 
Corporation is the Designated Examining Authority (``DEA'') that are 
required, pursuant to Rule 4.5, to file SEC form X-17A-5, with the 
Corporation on an annual or more frequent basis must file 
contemporaneously with the submission for the calendar year end ITSFEA 
compliance acknowledgments stating that the procedures mandated by this 
Rule have been established, enforced and maintained. Any ETP Holder or 
Associated Persons who becomes aware of a possible misuse of material, 
non-public information must promptly notify the Corporation's 
Surveillance Department.
    (b) Any ETP Holder who fails to file a compliance acknowledgment 
form in a timely manner shall be subject to a late filing charge of 
$500.00 for each occurrence. Repeated or aggravated failure to file may 
be referred to the Enforcement Department for appropriate disciplinary 
action.
Commentary .01-.03--No change.
* * * * *

Disclosure of Financial Arrangements

    Rule 6.11(a)--No change.
    (b) ETP Holders with financial arrangements must submit to the 
Corporation notification of the initiation, modification or termination 
of such financial arrangements in a form, time and manner approved by 
the Corporation within ten business days of the effective date of such 
arrangements or within such shorter period of time as the Corporation 
may require. Any ETP Holder who fails to file as such in a timely 
manner shall be subject to a late filing charge of $500.00 for each 
occurrence. Repeated or aggravated failure to file may be referred to 
the Enforcement Department for appropriate disciplinary action. 
[Failure to disclose the terms of such financial arrangements to the 
Corporation may result in disciplinary action.]

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 self-regulatory organization 
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. The self-regulatory organization 
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

Purpose
    The Exchange proposes to adopt fees for late filings of certain 
required FOCD forms. Options Trading Permit (``OTP'') Holders and OTP 
Firms and Equities Trading Permit (``ETP'') Holders (collectively, 
``Holders'') are required to file a number of FOCD related forms in a 
timely manner. The Exchange believes that timely submission of FOCD 
forms is a serious matter and believes it is necessary to assess late 
fees to encourage Holders to file such forms in a timely manner.
    The Exchange proposes to adopt late fees for the FOCD related forms 
described below.
1. Annual Compliance Acknowledgement Form
    Under PCX Rule 11.3 and PCXE Rule 6.3, every Holder must establish, 
maintain, and enforce written policies and procedures to prevent the 
misuse of material, non-public information by the respective Holder or 
persons associated with such Holder. Holders for whom the Exchange is 
the Designated Examining Authority that are required, under PCX and 
PCXE Rule 4.5, to file SEC Form X-17A-5 with the Exchange on an annual 
basis must file contemporaneously with the submission for the calendar 
year end ITSFEA compliance acknowledgments stating that the procedures 
mandated by PCX Rule 11.3 or PCXE 6.3 have been established, enforced 
and maintained. The Exchange proposes to assess a late filing fee of 
$500 for each occurrence to any Holder who fails to file the Annual 
Compliance Acknowledgement Form in a timely manner. Repeated or 
aggravated failure to file may be referred to the Enforcement 
Department for appropriate disciplinary action.
2. Financial Arrangement Disclosure Form
    Under PCX Rule 11.11 and PCXE 6.11, Holders with financial 
arrangements are required to submit to the Exchange notification of the 
initiation, modification or termination of such financial arrangements 
in a form, time and manner approved by the Exchange within ten business 
days of the effective date of such arrangements. The Exchange proposes 
to assess a $500 late fee to those Holders who fail to file the 
Financial Arrangement Disclosure Form in a timely manner. Repeated or 
aggravated failure to file may be referred to the Enforcement 
Department for appropriate disciplinary action.
Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \4\ of the Act, in general, and Section 6(b)(4) \5\ of the Act, in 
particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its OTP Holders, OTP 
Firms, ETP Holders, issuers, and other persons using its facilities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
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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.

[[Page 10015]]

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) \6\ of the Act and subparagraph (f)(2) of Act Rule 19b-
4 thereunder,\7\ because it is concerned solely with the administration 
of the Exchange. At any time within 60 days of the filing of such 
proposed rule change, the Commission could have summarily abrogated 
such rule change if it appeared to the Commission that such action was 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
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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-2004-130 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-2004-130. 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. 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 will also 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-2004-130 and should be 
submitted on or before March 22, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-808 Filed 2-28-05; 8:45 am]
BILLING CODE 8010-01-P