[Federal Register Volume 70, Number 113 (Tuesday, June 14, 2005)]
[Notices]
[Pages 34513-34514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-11681]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51791; File No. SR-PCX-2005-22]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
the Use of a Third Party to Maintain a Member's Books and Records

June 6, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 under the Act,\2\ notice is hereby given 
that on May 18, 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, II 
and III below. These 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\ 217 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 Exchange proposes to amend PCX Rule 9.17 and PCX Equities, Inc. 
(``PCXE'') Rule 9.17 to include a provision requiring OTP Holders, OTP 
Firms, and ETP Holders (collectively, ``Holders'') to provide the 
Exchange with a copy of the written undertaking required to be filed 
with the Commission pursuant to Rule 17a-4(i) under the Act when a 
third party maintains the Holder's books and records.
    The text of the proposed rule change is available on the PCX's 
Internet Web site (http://www.pacificex.com), at the principal office 
of the PCX, 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 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 PCX 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 purpose of this proposal is to amend PCX Rule 9.17 and PCXE 
Rule 9.17 to require a Holder to provide the PCX with a copy of the 
written undertaking required to be filed with the Commission pursuant 
to Rule 17a-4(i) under the Act when an outside service bureau maintains 
the Holder's books and records. Rules 17a-3 and 17a-4 under the Act set 
forth various provisions that require members of a national securities 
exchange to make, keep current, and preserve certain books and records. 
In addition, paragraph (i) of Rule 17a-4 specifies that if such records 
are prepared or maintained by an outside service bureau, depository, 
bank, or other recordkeeping service on behalf of the member, such 
outside entity must file with the Commission a written undertaking, 
signed by a duly authorized person, specifying that the records 
prepared or maintained for the member are the property of the member, 
that the records are subject to examination by the Commission or its 
designee, and that copies of the records shall be promptly furnished 
upon request to the Commission or its designee.
    Currently, PCX Rule 9.17 and PCXE Rule 9.17 provide that OTP 
Holders, OTP Firms, and ETP Holders shall make and retain all the books 
and records prescribed by the bylaws and rules of the Exchange, the 
rules and regulations of the Commission, and any other rules and 
regulations to which the Holder is subject. Such books and records must 
be retained for periods as prescribed and shall be made available for 
inspection by the Exchange. The Exchange proposes to add a provision to 
PCX Rule 9.17 and PCXE Rule 9.17 to require that if such books and 
records are prepared or maintained by an outside service bureau, 
depository, bank or other recordkeeping service on behalf of the 
Holder, the Holder must provide the Exchange with a copy of the written 
undertaking required to be filed with the Commission pursuant to Rule 
17a-4(i) under the Act for the Exchange's records.
    The Exchange believes it is important for the Exchange to receive a 
copy of the written undertaking to ensure that the Commission was 
properly notified that the books and records of a member are being 
maintained by a third party. In addition, by receiving a copy of the 
written undertaking, the Exchange will have information with respect to 
the Holders' books and records that is necessary for inspection 
purposes.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act \3\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act \4\ in particular, in that it 
is designed 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 and 
perfect the mechanisms of a free and open market and to protect 
investors and the public interest.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 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 inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change is being designated by the Exchange as 
``non-controversial'' pursuant to Section 19(b)(3)(A) of the Act \5\ 
and subparagraph (f)(6) of Rule 19b-4 under the Act \6\ because the 
proposed rule change: (1) Does not significantly affect the protection 
of investors or the public interest; (2) does not impose any 
significant burden on competition; and (3) does not become operative 
for 30 days from the date on which it was filed, or such shorter time 
as the Commission may designate if consistent with the protection of 
investors and the public interest. The PCX provided the Commission with 
written notice of its intent to file this proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five

[[Page 34514]]

business days prior to the date of filing the proposed rule change, or 
such shorter time as designated by the Commission.\7\ Consequently, the 
proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act and Rule 19b-4(f)(6). Pursuant to Rule 19b-
4(f)(6)(iii), the proposed rule change does not become operative for 30 
days from the date of filing.
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4.
    \7\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such 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.\8\
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    \8\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule change, 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-2005-22 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-0609. All submissions should refer to File No. SR-
PCX-2005-22. To help the Commission process and review your comments 
more efficiently, please use only one method. The Commission will post 
all electronic 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 the filings will also be available for 
inspection and copying at the principal office of the PCX and will be 
available on the PCX's Internet Web site (http://www.pacificex.com). 
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-2005-22 and 
should be submitted on or before July 5, 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. 05-11681 Filed 6-13-05; 8:45 am]
BILLING CODE 8010-01-P