[Federal Register: March 29, 2006 (Volume 71, Number 60)]
[Notices]
[Page 15794-15795]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29mr06-148]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53526; File No. SR-PCX-2006-19]
Self-Regulatory Organizations; Pacific Exchange, Inc. (Now Known
As NYSE Arca, Inc.); Notice of Filing and Immediate Effectiveness of
Proposed Rule Change and Amendment No. 2 Thereto Relating to Rebates
and Credits a Market Maker is Eligible To Receive for Executions That
Result From Principal Acting as Agent Orders Sent to and Executed at
Away Market Centers
March 21, 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 March 3, 2006, the Pacific Exchange, Inc. (``PCX'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II and III below, which Items were
prepared by the PCX. On March 15, 2006, NYSE Arca, Inc. (``NYSE Arca''
or ``Exchange'') \3\ filed Amendment No. 1 to the proposed rule change.
On March 16, 2006, the Exchange withdrew Amendment No. 1 and filed
Amendment No. 2 to the proposed rule change.\4\ The Exchange has
designated this proposal as one establishing or changing a due, fee, or
other charge imposed by a self-regulatory organization pursuant to
section 19(b)(3)(A)(ii) of the Act \5\ and Rule 19b-4(f)(2)
thereunder,\6\ which renders the proposal effective upon filing with
the Commission.\7\ 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\ On March 6, 2006, the PCX filed a proposed rule change (SR-
PCX-2006-24) to amend its rules to reflect the following name
changes: (i) From PCX to NYSE Arca; (ii) from PCX Equities, Inc. to
NYSE Arca Equities, Inc.; (iii) from PCX Holdings, Inc., to NYSE
Arca Holdings, Inc.; and (iv) from the Archipelago Exchange, L.L.C.
to NYSE Arca, L.L.C. That proposed rule change became effective upon
filing. Amendment No. 2 to the instant proposed rule change reflects
these name changes. The Exchange states that it plans to
subsequently file a proposed rule change to update such names in its
Schedule of Rates and Charges (``Schedule'').
\4\ In Amendment No. 2, the Exchange made clarifying and
technical changes to the original filing and added a provision in
the Schedule that requires Market Makers to reimburse the Exchange
for any excessive credits received by such Market Makers.
\5\ 15 U.S.C. 78s(b)(3)(A)(ii).
\6\ 17 CFR 240.19b-4(f)(2).
\7\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change, the
Commission considers the period to commence on March 16, 2006, the
date on which the Exchange filed Amendment No. 2. See 15 U.S.C.
78s(b)(3)(C).
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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 its Schedule to create a credit
associated with the fees that a Market Maker is charged for executions
that result from principal acting as agent orders sent to and executed
at away market centers. The Exchange also proposes to make a minor
housekeeping correction to footnote 2 under the Trade Related Charges
section of the Schedule. The text of the proposed rule change is
available at the Commission's Public Reference Room, at the Exchange's
Web site (http://www.archipelago.com/regulation/filings.asp) and at the
Exchange's Office of the Secretary.
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 proposal. 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 Exchange proposes to amend the Schedule in order to create a
credit associated with the fees a Market Maker is charged for
executions that result from principal acting as agent orders sent to
and executed at away market centers.
Presently, the Exchange charges Market Makers a $0.26 per contract
fee for all transactions. On transactions that
[[Page 15795]]
result when principal acting as agent orders are sent to and executed
at away market centers, the Exchange presently rebates to the Market
Maker the transaction fee of $0.26. The Exchange believes that this
rebate is warranted due to the fact a Market Maker acting in this
capacity is doing so on behalf of public customer orders and receives
no beneficial gain from the transaction. The rebate of the Exchange
transaction fee of $0.26 covers the fees assessed by the Exchange on
these trades; it does not cover additional costs a Market Maker incurs
in connection with executing the trade. In addition to the Exchange
transaction fee, a Market Maker must pay a transaction fee at the away
exchange and clearing costs associated with the trade.
To help offset the additional costs associated with principal
acting as agent orders that are sent to and executed at away market
centers, the Exchange proposes to credit Exchange Market Makers $0.26
per contract on these transactions. This credit will be in addition to
the $0.26 rebate the Exchange rebates market Makers for these trades.
The new $0.26 credit is designed to offset additional costs associated
with sending orders away and might not cover all costs associated with
these types of trades. In the event that the total amount the Exchange
credits a Market Maker for sending orders away is in excess of the
total actual expenses incurred in sending the orders away, the Exchange
would be entitled to a reimbursement of the excess credits.\8\ Market
Maker expenses associated with sending orders away to other market
centers will be based on the total aggregate expenses incurred during a
calendar month.
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\8\ The Commission notes that the transaction fees charged by
away market centers for principal acting as agent orders executed on
away markets are pursuant to pilot programs scheduled to expire on
July 31, 2006.
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In a previous filing (SR-PCX-2006-15),\9\ the PCX eliminated the On
Line Comparison fee associated with Market Maker transactions. A
reference to that comparison fee was left inadvertently in the footnote
attached to the Market Maker transaction fee. The Exchange now proposes
to remove this reference to reconcile the footnote with the previously
effective filing. Removing the reference to the comparison fee at this
time will make no substantive change to the Schedule.
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\9\ That proposed rule change was filed with the Commission on
February 23, 2006 and became effective upon filing. See Securities
Exchange Act Release No. 53485 (March 14, 2006).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act \10\ in general, and section 6(b)(4) of
the Act \11\ in particular, in that it provides for the equitable
allocation of dues, fees and other charges among its OTP Firms, OTP
Holders and other persons using its facilities for trading option
contracts.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change will not 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
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective pursuant to
section 19(b)(3)(A)(ii) of the Act,\12\ and paragraph (f)(2) of Rule
19b-4 thereunder \13\ because it establishes or changes a due, fee, or
other charge. 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.\14\
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\12\ 15 U.S.C. 78s(b)(3)(A)(ii).
\13\ 17 CFR 240.19b-4(f)(2).
\14\ See supra note 7.
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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, 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 rule-comments@sec.gov. Please include
File Number SR-PCX-2006-19 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 20549-1090.
All submissions should refer to File Number SR-PCX-2006-19. 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
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-
2006-19 and should be submitted on or before April 19, 2006.
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. E6-4516 Filed 3-28-06; 8:45 am]
BILLING CODE 8010-01-P