[Federal Register Volume 70, Number 57 (Friday, March 25, 2005)]
[Notices]
[Pages 15375-15376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1304]


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SECURTITES AND EXCHANGE COMMISSION

[Release No. 34-51401; File No. SR-PCX-2005-26]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Remote Market Makers' Ability To Be Reappointed Options Issues

March 21, 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 March 4, 2005, 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 PCX. The Exchange filed the proposal pursuant to 
Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) thereunder 
\4\ as being concerned solely with the administration of the Exchange, 
which renders the proposal effective upon the 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)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX is proposing to amend PCX Rules 6.35(g)(4) to eliminate the 
requirement that a Remote Market Maker (``RMM'') wait one full calendar 
quarter prior to being reappointed in an option issue that such RMM 
previously relinquished. Below is the text of the proposed rule change. 
Proposed deletions are in brackets.
* * * * *

Rule 6.35 Appointment of Market Makers

    (a)-(f) No Change.
    (g) Remote Market Makers.
    (1)-(3) No Change.
    (4) Remote Market Makers may withdraw from trading an option issue 
that is within their primary appointment by providing the Exchange with 
a three-business-day written notice of such withdrawal. Remote Market 
Makers who fail to give advance written notice of withdrawal to the 
Exchange may be subject to formal disciplinary action pursuant to Rule 
10. [Subsequent to withdrawal, the Remote Market Maker may not be re-
appointed as a Remote Market Maker in that option issue for a period of 
one full calendar quarter.]
    (5)-(6) No Change.
    (h)-(i) 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, 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 IV 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
    PCX Rule 6.35(g)(4) currently specifies that an RMM must wait one 
full calendar quarter prior to being reappointed in an option issue 
that was previously relinquished by such RMM. According to the 
Exchange, when PCX Rule 6.35(g)(4) was originally approved, the one 
calendar quarter prohibition was necessary to facilitate an effective 
rollout of PCX's new electronic trading platform, PCX Plus. In 
addition, the restriction was designed to mitigate the anticipated 
administrative burden related to frequent requests for the addition and 
removal of issues included in an RMM's primary appointment.
    Since the introduction of PCX Plus, the original reasons for the 
one calendar quarter restriction no longer exist. PCX Plus has been 
fully implemented and is operating effectively. The need to prohibit 
RMMs from adding and removing issues on a regular basis to maintain 
system integrity is no longer necessary. Further, based on actual 
results, the Exchange has learned that RMMs do not switch issues on a 
frequent basis, as originally anticipated. As such, the Exchange 
overestimated the administrative burden related to adding and/or 
removing issues from an RMM's primary appointment. Based on actual 
results, the Exchange staff is capable of handling the administrative 
workload that would result from the removal of the current restriction.
    Finally, the elimination of the one calendar quarter prohibition 
would

[[Page 15376]]

allow RMMs to add and/or remove issues more freely and thus allow 
liquidity to move into those options issues where a greater trading 
demand exists. PCX believes that additional liquidity resulting from 
the removal of this restriction would allow it to provide better 
markets and thus benefit the public.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 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

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(iii) of the Act \7\ and subparagraph (f)(3) of Rule 
19b-4 thereunder,\8\ because it is concerned solely with the 
administration of the Exchange. 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \8\ 17 CFR 240.19b-4(f)(3).
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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 No. SR-PCX-2005-26 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 No. SR-PCX-2005-26. 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 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 No. SR-PCX-2005-26 and should be 
submitted on or before April 15, 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. E5-1304 Filed 3-24-05; 8:45 am]
BILLING CODE 8010-01-P