[Federal Register Volume 71, Number 9 (Friday, January 13, 2006)]
[Notices]
[Pages 2284-2286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-324]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53069; File No. SR-PCX-2006-01]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Minimum Price Variation for Entry of Orders for Equity Securities 
Traded on the Archipelago Exchange

January 6, 2006.
    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 4, 2006, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly owned subsidiary, PCX Equities, Inc. 
(``PCXE''), 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. The PCX filed 
the 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its rules governing the Archipelago 
Exchange (``ArcaEx''), the equities trading facility of PCXE, to: (1) 
Amend Commentary .04 to PCXE Rule 7.6 on minimum price variations for 
quoting and entry of orders in equity securities; (2) delete Commentary 
.05 to PCXE Rule 7.6; (3) renumber Commentary .06 to PCXE Rule 7.6 and 
correct a cross-reference in that Commentary; and (4) delete Commentary 
.01 to PCXE Rule 6.16. The text of the proposed rule change is 
available on the PCX's 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 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 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
    The Commission adopted Regulation NMS on April 6, 2005.\5\ One of 
the new rules under Regulation NMS is Rule 612, Minimum Pricing 
Increment. That rule prohibits a national securities exchange, its 
members, and quotation vendors (among others) from displaying, ranking, 
or accepting a bid, offer, order, or indication of interest for any NMS 
stock that is priced in an increment smaller than $0.01 per share, 
unless it is priced less than $1.00 per share.\6\ In the latter case, 
the exchange, its members, and its quotation vendors may display, rank, 
or accept a bid, offer, order, or indication of interest in the NMS 
stock in an increment no smaller than $0.0001 per share.\7\ The 
compliance date for Rule 612 is January 31, 2006.\8\
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    \5\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005). Regulation NMS is comprised of 
the rules at 17 CFR 642.600-642.612.
    \6\ See 17 CFR 242.612(a).
    \7\ See 17 CFR 242.612(b).
    \8\ See Securities Exchange Act Release No. 52196 (Aug. 2, 
2005), 70 FR 45529 (Aug. 8, 2005).
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    Currently, PCXE Rule 7.6, Commentary .04 provides that the minimum 
price variation (``MPV'') for

[[Page 2285]]

quoting and entering orders in equity securities traded on ArcaEx is 
$0.01 per share, with the exception of securities priced less than 
$1.00 per share, in which case, on a pilot basis through September 30, 
2005, the MPV is $0.001 per share. PCXE Rule 7.6, Commentary .05 
provides that PCXE will round such sub-penny prices to whole penny 
increments, by rounding the bid down to the next whole penny and 
rounding the offer up to the next whole penny, and will display the 
rounded quotes in the consolidated quotation system without a rounding 
identifier.
    With this filing, the Exchange is seeking to amend PCXE Rule 7.6, 
Commentary .04 to provide that (1) the Exchange will accept orders in 
equity securities traded on ArcaEx that are priced less than $1.00 per 
share in increments as small as $0.0001 per share, as permitted under 
Rule 612; (2) it will round such orders to whole penny increments 
following the same rounding conventions described above; and (3) it 
will display the rounded quotes in the consolidated quotation system. 
As currently provided in PCXE Rule 7.6, Commentary .04, the MPV for 
quoting and entering orders in equity securities traded on ArcaEx is 
$0.01 per share.
    The Exchange also proposes to delete Commentary .05 to PCXE Rule 
7.6 and Commentary .01 to PCXE Rule 6.16 because they will become 
outdated when the amendments to PCXE Rule 7.6, Commentary .04 take 
effect, and to change the numbering of PCXE Rule 7.6, Commentary .06 to 
Commentary .05 and correct a cross-reference in that Commentary.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\10\ in particular, in that it 
is designed to facilitate transactions in securities, to promote just 
and equitable principles of trade, to enhance competition, and to 
protect investors and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 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

    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 after the date of the filing, or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \11\ and 
Rule 19b-4(f)(6) thereunder.\12\ 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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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required by Rule 19b-
4(f)(6)(iii) under the Act, the Exchange also provided with the 
Commission with written notice of its intent to file the proposed 
rule change, along with a brief description and text of the proposed 
rule change, at least five business days prior to the date of the 
proposed rule change.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally does 
not become operative for 30 days after the date of filing.\13\ However, 
Rule 19b-4(f)(6)(iii) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Exchange has asked the Commission to waive the 
30-day operative delay and allow the proposed rule change to become 
operative immediately. The Commission hereby grants that request.\14\ 
The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because the proposal is consistent with the requirements of Rule 612 
and waiving the operative delay will allow the PCX to meet the 
compliance deadline for Rule 612.
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    \13\ See id.
    \14\ For purposes only of waiving the 30-day operative delay, 
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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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-2006-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-PCX-2006-01. 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 will also be available for inspection and copying at the 
principal office of the Exchange. 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-2006-01 and 
should be submitted on or before February 3, 2006.


[[Page 2286]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-324 Filed 1-12-06; 8:45 am]
BILLING CODE 8010-01-P