[Federal Register Volume 70, Number 58 (Monday, March 28, 2005)]
[Notices]
[Pages 15672-15674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1334]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51398; File No. SR-PCX-2005-10]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Order Granting Accelerated Approval of Proposed Rule Change 
and Amendment No. 1 Thereto Requiring Electronic Filing of Form U4 and 
Form U5 by OTP Holders and OTP Firms Through the CRD

March 18, 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 January 31, 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 the Exchange. On February 
28, 2005, the Exchange filed Amendment No. 1 to the proposal. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons and is 
approving the proposed rule change, as amended, on an accelerated 
basis.
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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

    The PCX proposes to amend PCX Rules 2.4, 2.17 and 2.23 to support 
the implementation of an electronic registration process. The text 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 Exchange 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
    The current PCX procedures require Option Trading Permit (``OTP'') 
applicants to submit the Uniform Application for Securities Industry 
Registration or Transfer (``Form U4'') to the Exchange when they are 
requesting approval to become an OTP Holder or OTP Firm and the Uniform 
Termination Notice for Securities Industry Registration (``Form U5'') 
when they wish to terminate an OTP.\3\ These forms

[[Page 15673]]

are currently submitted to the Exchange's Shareholder and Registration 
Services (``SRS'') department.
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    \3\ In Amendment No. 1 the Exchange stated that these 
requirements are contained in the current PCX Rules. The word 
``Rules'' is replaced by the word ``procedures'' pursuant to the 
telephone conversation between Steven Matlin, Senior Counsel, PCX, 
and Kathy England, Assistant Director, Elizabeth Badawy, Accountant, 
and Natasha Cowen, Attorney, Division of Market Regulation, 
Commission, on March 15, 2005.
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    The Exchange is now proposing to require all current OTP Holders 
and OTP Firms and new applicants to use the National Association of 
Securities Dealers, Inc. (``NASD'') Central Registration Depository 
(``CRD'') as the mechanism for submitting required Forms U4 and U5 
filings to the Exchange. As a result of this change, all persons that 
currently submit paper Forms U4 and U5 filings to the Exchange would be 
required to submit these forms electronically through Web CRD. The CRD 
is a Web based system that provides broker-dealers and their associated 
persons with ``one stop filing'' with the Commission, NASD, and other 
self-regulatory organizations and regulators. The CRD is operated by 
NASD and is used by participating regulators in connection with 
registering and licensing broker-dealers and their associated persons.
    As a result of moving from a manual application process to a fully 
electronic application process, the Exchange is proposing to reduce the 
time period, in which OTP Holders must file amendments to their 
applications, from fifteen business days to ten business days. The 
Exchange feels that the switch from a manual application process to a 
fully electronic application justifies such a reduction in time and 
therefore will not place any additional burden on the applicant. The 
Exchange has also proposed certain technical changes to the rule text 
that are necessary to adopt the rules associated with an electronic 
filing process.
    The Exchange is also proposing to require any OTP Holder that 
terminates its OTP to electronically file within ten business days of 
such termination Form U5 with the CRD. In addition, any amendments to 
the Form U5 must be filed within ten business days of the occurrence 
causing the amendment. This proposed rule is necessary to fully 
automate the registration/termination process.
    The Exchange anticipates that during the period between April 18, 
2005, and May 13, 2005, OTP Holders and OTP Firms will submit an 
updated Form U4 to Web CRD for all individuals who are employees of OTP 
Holders and OTP Firms who have not previously submitted a Form U4 to 
Web CRD.\4\ The proposed rule change would require any person seeking 
to become an OTP Holder or OTP Firm or any individual who requires 
registration pursuant to PCX Rule 2.23 to electronically file a Form U4 
with Web CRD. The Exchange believes that automating the review of 
registration applications and termination notices by transmitting all 
Forms U4 and U5 filings to Web CRD will enable the Exchange to perform 
more efficiently its regulatory responsibilities with respect to OTP 
Holders and OTP Firms and, thereby, will ultimately enhance investor 
protection.
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    \4\ A number of individuals that are employees of OTP Holders 
and OTP Firms already have submitted Form U4 to Web CRD if they work 
for dual PCX/NASD member firms and their job responsibilities 
require registration with NASD.
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2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, 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, in that 
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, as 
amended, 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, as amended, 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-2005-10 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-2005-10. 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. 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-2005-10 and should be submitted on or before April 
18, 2005.

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

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities exchange.\7\ 
In particular, the Commission finds that the proposed rule change is 
consistent with Section 6(b)(5) of the Act,\8\ which requires, among 
other things, that the Exchange's rules promote just and equitable 
principles of trade and facilitate transactions in securities, and, in

[[Page 15674]]

general, protect investors and the public interest.
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    \7\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. See 15 
U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange has requested that the Commission approve the proposed 
rule change, as amended, on an accelerated basis. The Commission finds 
good cause, pursuant to Section 19(b)(2) of the Act,\9\ for approving 
the proposed rule change, as amended, prior to the thirtieth day after 
the date of publication of notice in the Federal Register. The 
Commission has previously approved a substantially similar proposed 
rule change submitted by the American Stock Exchange LLC to provide for 
the processing of the Forms U4 and U5 through Web CRD\10\ and does not 
believe that the proposed rule change raises novel regulatory issues. 
The proposed rule change, as amended, promotes uniformity of 
registration in the industry. Accordingly, the Commission finds that 
there is good cause, consistent with Section 6(b)(5) of the Act,\11\ to 
approve the proposed rule change, as amended, on an accelerated basis.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ See Securities Exchange Act Release No. 48067 (June 19, 
2003), 68 FR 39601 (July 2, 2003) (SR-Amex-2003-48).
    \11\ 15 U.S.C. 78s(b)(5).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change, as amended, (SR-PCX-2005-10) is hereby 
approved on an accelerated basis.\12\
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    \12\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1334 Filed 3-25-05; 8:45 am]
BILLING CODE 8010-01-P