[Federal Register: October 1, 2004 (Volume 69, Number 190)]
[Notices]
[Page 58989-58991]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01oc04-121]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50448; File No. SR-PCX-2004-43]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment Nos. 1 and 2 Thereto by Pacific Exchange, Inc.
Relating to Proposed Listing Fee Schedule for Structured Products
September 24, 2004.
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 May 11, 2004 the Pacific Exchange, Inc. (``PCX'' or ``Exchange''),
through its subsidiary, PCX Equities, Inc. (``PCXE''), filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by PCXE. On August 9, 2004, the Commission received
Amendment No. 1 to the proposed rule change.\3\ On August 23, 2004, the
Commission received Amendment No. 2 to the proposed rule change.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Tania Blanford, Regulatory Policy, PCX, to
Nancy J. Sanow, Assistant Director, Division of Market Regulation
(``Division''), Commission, dated August 5, 2004 (``Amendment No.
1''). Amendment No. 1 replaced and superseded the original filing in
its entirety. In Amendment No. 1, PCX added a definition of
``structured products'' to the proposal and made other clarifying
changes.
\4\ See letter from Tania Blanford, Regulatory Policy, PCX, to
Nancy J. Sanow, Assistant Director, Division, Commission, dated
August 20, 2004 (``Amendment No. 2''). In Amendment No. 2, made a
minor typographical correction to its proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
The PCX is proposing to amend its Schedule of Fees and Charges
(``Schedule'') in order to adopt new listing fees for listing
structured products on the PCXE and traded on the Archipelago Exchange
(``ArcaEx''), a facility of the PCXE. The PCX proposes to implement
these fees retroactive for listings and listing applications pending as
of April 1, 2004. The PCX also proposes to add a definition of
structured product in PCXE Rule 5.1(b)17. The text of the proposed rule
change is available at the Office of the Secretary of the Exchange and
at the Commission.
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. 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 PCX, through its wholly owned subsidiary, PCXE, proposes to
adopt new listing fees specifically for structured products listed on
the PCXE and traded on ArcaEx.\5\ The proposed fees include a non-
refundable application processing fee, a one-time initial listing fee,
and an annual maintenance fee based on the number of products listed
with PCXE.\6\
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\5\ Structured products are derived from and/or based on a
single security or securities, a basket of stocks, an index, a
commodity, debt issuance and/or a foreign currency, among other
things. Structured products include index and equity linked notes,
term notes and units comprised of equity and/or debt securities.
\6\ The remaining portions of the current listing fees (Company
Name Change Fee, Change in Par Value Fee, Substitute Initial Listing
Fee, and Additional Shares Listing Fee) will continue to apply to
structured products. Telephone conversation between Leah Mesfin,
Special Counsel, Division, Commission, and Tania J. Blanford, Staff
Attorney, Regulatory Policy, PCX, on September 16, 2004.
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The PCX believes there are several reasons to adopt a fee schedule
specifically for structured products. First, PCXE's current listing
fees do not explicitly provide for fees to list these types of
securities. Accordingly, the amended Schedule would provide guidance
and clarity to issuers and the public regarding the applicable fees.
Second, in many cases, depending on the number of products listed, the
proposed listing fees would substantially reduce the fees paid by
issuers of structured products, enabling ArcaEx to compete more
effectively for listings with other marketplaces.\7\
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\7\ In addition to the described substantive changes, the
Exchange also proposes to replace the `*' used reference the
footnotes in the Schedule of Fees and Charges with sequential
numbers for clarity.
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Summary of Current and Proposed Fee Changes
(a) Application Processing Fees
Currently, issuers are charged a $500 application processing fee.
This fee is non-refundable, although upon approval for listing, it is
credited towards the initial listing fee. PCX proposes to retain an
application processing fee, but proposes to charge either $500 or the
initial listing fee, whichever is less.
(b) Initial Listing Fees
Currently, the general one-time initial listing fees are based on
whether the issue is also listed on the New York Stock Exchange,
American Stock Exchange, or Nasdaq National Market. If an issue is
dually listed, the initial listing fee is $10,000 per product;
otherwise, the initial listing fee is $20,000 per product. These fees
apply to each product listed, regardless of the number of products
listed by the issuer.
PCX proposes to adopt a one-time initial listing fee for structured
products as follows: For the first initial public offering, the initial
listing fee would be fixed at $20,000. For subsequent initial public
offerings of structured products from the same issuer, the initial
listing fee would be $1,000 for each additional listed issue,
regardless of the number of products listed or if prior products
remained listed. For structured products which are already listed on
another exchange or marketplace, or are quoted on an inter-dealer
quotation system, PCX proposes a fixed initial listing fee of $5,000
for the first structured product listed by the issuer. For subsequent
structured products listed by the same issuer that are already listed
on another exchange or marketplace, or are quoted on an inter-dealer
quotation system, PCX proposes to base the listing fee on
[[Page 58990]]
the number of products listed, as follows:
------------------------------------------------------------------------
Number of products Fee
------------------------------------------------------------------------
Two through 10............................................... $1,000
11 through 100............................................... 500
101+......................................................... 100
------------------------------------------------------------------------
This schedule would apply regardless of whether these products
remain listed elsewhere.
(c) Annual Maintenance Fees
Currently, the annual maintenance fees are fixed and based on
whether the issue is also listed on the New York Stock Exchange,
American Stock Exchange, or Nasdaq National Market. If dually listed,
the maintenance fee is $1,000 per product; otherwise, the maintenance
fee is $2,000 per product. These fees apply regardless of the number of
products listed by the issuer. Annual maintenance fees are payable
beginning in the first full calendar year of listing.
The PCX proposes to adopt a fee schedule for annual maintenance
fees specific to structured products as follows: $5,000 for the first
product listed by an issuer, regardless of whether the product is
listed elsewhere. For all additional structured products listed by the
same issuer, the PCX proposes to base the annual maintenance fee on the
number of products listed, as follows:
------------------------------------------------------------------------
Annual
Number of products maintenance
fee
------------------------------------------------------------------------
Two through 10............................................. $1,000
11 through 100............................................. 500
101+....................................................... 100
------------------------------------------------------------------------
This schedule would apply regardless of whether these products
remain listed elsewhere.
(d) Implementation
The PCX proposes that these modifications become effective
retroactive for all listings and listing applications pending as of
April 1, 2004.
(e) Definition of Structured Products
Finally, the PCX proposes to include a definition of structured
products in PCXE Rule 5.1(b)(17). Structured products are derived from
and/or based on a single security or securities, a basket of stocks, an
index, a commodity, debt issuance and/or a foreign currency, among
other things. Structured products include index and equity linked
notes, term notes and units comprised of equity and/or debt securities.
The PCX believes that providing a definition of structure products is
appropriate to alleviate any confusion for issuers regarding the
listing fees for structured products.
2. Statutory Basis
The PCX believes that the proposal is consistent with Section 6(b)
of the Act,\8\ in general, and Section 6(b)(4) of the Act,\9\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its members and issuers
and other persons using its facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
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B.Self-Regulatory Organization's Statement on Burden on Competition
The PCX 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
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 rule-comments@sec.gov. Please include
File Number SR-PCX-2004-43 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-2004-43. 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 Section, 450 Fifth
Street, NW., Washington, DC 20549. 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-
2004-43 and should be submitted on or before October 22, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
Exhibit A
Text of the Proposed Rule Change \11\
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\11\ New text is italicized; deleted text is in [brackets].
[[Page 58991]]
Schedule of Fees and Charges for Exchange Services
[PCX equities: listing fees]
------------------------------------------------------------------------
------------------------------------------------------------------------
Administrative Listing Fees:
Application Processing Fee $500.00
1[*].
Application Processing Fee for $500.00 or the initial Structured
Products\1\ listing fee, whichever
is less.
Company Name Change........... $250.00.
Change in Par Value........... $250.00.
Initial [Original] Listing
Fees2[*]:
Common Stock, dually listed $10,000.00.
with the NYSE, AMEX or Nasdaq
NM.
Common Stock, not dually $20,000.00.
listed.
Additional Classes of Common $2,500.00.
Stock.
Preferred Stock, Warrants, $2,500.00.
Debit Instruments, Purchase
Rights, Units.
Initial Listing Fees for
Structured Products:
Initial Public Offerings...... $20,000.00.
Additional IPOs listed by the $1,000.00.
same issuer or ``family'' of
fund.
Structured Products multiply $5,000.00.
listed on another marketplace
or quoted on an inter-dealer
quotation system.
------------------------------------------------------------------------
1[*] This is a non-refundable, fixed charge for review of listing
applications. Issues approved for listing will have this charge
credited towards the Initial [Original] Listing fee.
2[*] The Initial [Original] Listing fees are fixed and are not charged
by the number of shares listed.
Additional Structured Products listed by same issuer:
------------------------------------------------------------------------
Number of structured products Fee
------------------------------------------------------------------------
2 through 10............................................. $1,000
11 through 100........................................... 500
101+..................................................... 100
------------------------------------------------------------------------
Substitute Initial [Original] Listing Fee3[*]:
Per Application (fixed charge)...................... $2,500.00
Additional Shares Listing Fee:
Per share........................................... .0025
Minimum charge (per application).................... 500.00
Maximum charge (per application).................... 7500.00
Maximum charge (per year)........................... 15,000.00
Annual Listing Maintenance Fee (Payable January of each
year following listing):
For one issue, dually listed with the NYSE, AMEX or 1,000.00
Nasdaq NM..........................................
For one issue, not dually listed.................... 2,000.00
For each additional issue........................... 500.00
Minimum (per year).................................. 1,000.00
Maximum (per year).................................. 5,000.00
For one Structured Product.......................... 5,000.00
3[*] A Substitute Initial [Original] Listing would occur as a result of
a change in state of incorporation, reincorporation under the laws of
same state, reverse stock split, recapitalization, or similar events
affecting the nature of a listed security.
For each additional Structured Product listed by the same
issuer:
------------------------------------------------------------------------
Annual
Number of structured products maintenance
fee
------------------------------------------------------------------------
2 through 10........................................... $1,000
11 through 100......................................... 500
101+................................................... 100
------------------------------------------------------------------------
Rules of PCX Equities, Inc.
Rule 5 Listings
Section 1. General Provisions and Definitions
* * * * *
Rule 5.1(a)--No change.
Rule 5.1(b)(1)-(16)--No change.
(17) The term ``Structured Products'' means products that are
derived from and/or based on a single security or securities, a
basket of stocks, an index, a commodity, debt issuance and/or a
foreign currency, among other things. Structured Products include
index and equity linked notes, term notes and units comprised of
equity and/or debt securities.
* * * * *
[FR Doc. E4-2449 Filed 9-30-04; 8:45 am]
BILLING CODE 8010-01-P