[Federal Register Volume 70, Number 131 (Monday, July 11, 2005)]
[Notices]
[Pages 39842-39843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13546]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51972; File No. SR-PCX-2005-84]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Trading Securities in Subpenny Increments

July 5, 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 June 30, 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 substantially been prepared by the Exchange. The Exchange has 
filed this proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and 
Rule 19b-4(f)(6) thereunder,\4\ 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).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly owned subsidiary PCX Equities, 
Inc. (``PCXE''), is proposing to amend the interpretation to PCXE Rule 
7.6(a) to reflect the anticipated extension of a Commission exemption 
that permits securities transactions to be entered, executed, and 
reported in subpenny increments, although such quotations are 
disseminated in rounded, penny increments without a rounding 
identifier. The text of the proposed rule change is available on the 
PCX Web site (http://www.pacificex.com), at the Exchange's principal 
office, 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 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

1. Purpose
    The Commission previously granted PCX an exemption from Rules 
11Ac1-1, 11Ac1-2, and 11Ac1-4 under the Act \5\ with respect to 
securities priced less than $1.00 per share that permits Archipelago 
Exchange, a facility of PCX (``ArcaEx''), electronic trading permit 
(``ETP'') holders of ArcaEx, and vendors that distribute ArcaEx 
quotation information to enter, execute, and report quotations in 
exchange-listed, Nasdaq National Market, and SmallCap securities in 
increments less than $0.01 per share, although such quotations are 
disseminated in rounded, penny increments without a rounding 
identifier.\6\ In conjunction with the initial grant of this exemption, 
the Exchange modified Interpretation .05 to PCXE Rule 7.6(a) on a pilot 
basis to reflect a subpenny minimum price variation for securities 
priced less than $1.00. That pilot rule is operative until September 
30, 2005.\7\ Subsequently, the Exchange requested the Commission to 
extend the exemption to permit the Exchange to accept and execute 
orders and quotations of all exchange-listed, National Market, and 
SmallCap securities in increments less than $0.01 per share, although 
such quotations are disseminated in rounded, penny increments without a 
rounding identifier.\8\ That exemption expires on June 30, 2005.\9\ PCX 
has requested the Commission, in a separate letter, to extend this 
exemption until the effective date of Rule 612 of Regulation NMS.\10\ 
With this filing, the Exchange is amending Interpretation .05 to PCXE 
Rule 7.6(a) to reflect the anticipated extension of this Commission 
exemption.\11\
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    \5\ 17 CFR 240.11Ac1-1, 240.11Ac1-2, and 11Ac1-4.
    \6\ See Letter from David S. Shillman, Associate Director, 
Division of Market Regulation, Commission, to Mai S. Shiver, 
Director of Regulatory Policy, PCX, dated September 24, 2004.
    \7\ See Securities Exchange Act Release No. 50441 (September 24, 
2004), 69 FR 58570 (September 30, 2004).
    \8\ See Letter from David S. Shillman, Associate Director, 
Division, Commission, to Mai S. Shiver, Director of Regulatory 
Policy, PCX, dated February 10, 2005.
    \9\ See id.
    \10\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005) (Regulation NMS adopting 
release). Rule 612, which governs sub-penny quotations, will become 
effective on August 29, 2005.
    \11\ The Commission notes that it has granted the Exchange the 
extension it requested. See Letter to Alden Adkins, Chief Regulatory 
Officer, PCX, from Annette L. Nazareth, Director, Division, 
Commission, dated July 1, 2005.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\12\ in general, and furthers the 
objectives of Section 6(b)(5),\13\ 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, 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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    \12\ 15 U.S.C. 78f(b).
    \13\ 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.

[[Page 39843]]

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

    The Exchange asserts that the foregoing rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act \14\ and Rule 19b-
4(f)(6) thereunder \15\ because the rule change does not:
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6).
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    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) Impose any significant burden on competition; and
    (iii) 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.\16\ The Exchange has requested that the Commission waive the 
30-day operative delay and designate the proposed rule change effective 
immediately.
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    \16\ In addition, Rule 19b-4(f)(6)(iii) states that the Exchange 
must provide the Commission with written notice of its intent to 
file the proposed rule change at least five days prior to the date 
of filing of the proposed rule change. The Commission has determined 
to waive the requirement in this case.
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    The Commission hereby grants the request.\17\ The Commission 
believes that such waiver is consistent with the protection of 
investors and the public interest because the sole purpose of the rule 
change to accurately reflect the new expiration date of a Commission 
exemption.
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    \17\ For purposes only of accelerating the operative date of the 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    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.

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-2005-84 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 20549-9303.
    All submissions should refer to File No. SR-PCX-2005-84. 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 changes 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 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-2005-84 and should be submitted on or before August 1, 2005.
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    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 05-13546 Filed 7-8-05; 8:45 am]
BILLING CODE 8010-01-P