[Federal Register: September 9, 2005 (Volume 70, Number 174)]
[Notices]
[Page 53706-53707]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09se05-129]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52371; File No. SR-PCX-2005-68]
Self-Regulatory Organizations; Pacific Exchange, Inc.; Order
Approving Proposed Rule Change and Amendment No. 1 Thereto To Modify
Rate Schedule Retroactively To January 1, 2002 To Cap the Fees on
Multiple Options Issues Transfers
August 31, 2005.
On May 13, 2005, the Pacific Exchange, Inc. (``PCX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to modify its rate schedule retroactively to
January 1, 2002 to cap the fees on multiple options issues transfers.
The Exchange amended the proposal on July 1, 2005.\3\ The proposed rule
change, as amended, was published for notice and comment in the Federal
Register on July 27, 2005.\4\ The Commission did not receive comments
on the proposal. This order approves the proposed rule change, as
amended.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 replaced and superseded the original
proposal.
\4\ See Securities Exchange Act Release No. 52090 (July 20,
2005), 70 FR 43492.
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PCX proposes to cap the fees on multiple options issues transfers.
Currently, PCX charges a Lead Market Maker (``LMM'') that has been
allocated an options issue $1,000 per issue if the LMM transfers the
options issue to another LMM.\5\ PCX originally adopted the fee to help
offset its administrative and technological costs related to
transferring an options issue. While PCX believes it is still accurate
to charge $1,000 for the transfer of one issue, when multiple issues
are transferred as part of a single transaction, the overall costs of
PCX associated with the transfer may be reduced. When multiple issues
are transferred as part of a single transaction, PCX believes that
charging the full $1,000 on every transferred issue with no limit to
the total charges is not the original intent of the transfer fee.
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\5\ According to PCX, options issue transfers are conducted in
accordance with PCX Transfer of Issues Guidelines. See PCX
Regulatory Information Bulletin RBO-03-09 (August 11, 2003).
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PCX proposes to continue charging $1,000 per issue transferred, but
cap the fee at $15,000 for the first one hundred issues transferred,
and $5,000 for every one hundred (or any part of) additional issues
transferred. To qualify for the rate cap, all transfers must be deemed
to be part of a single transaction and meet the PCX Transfer of Issues
Guidelines. The new fee cap would allow PCX to more accurately assess
an LMM the technological and administrative costs associated with the
transfer of allocated issues. PCX proposes to make this fee effective
retroactive to January 1, 2002, the date the transfer fee was first
effective, so that it would have the ability to make any adjustments it
deems necessary to allow previous charges to properly reflect the true
intent of the transfer fee. Further, PCX represented that it would
review all past transfers to determine if any adjustments are warranted
pursuant to the proposed rate schedule.
After careful review of the proposed rule change, as amended, the
Commission finds that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\6\ Specifically, the
Commission believes that the proposed rule change is consistent with
Section 6(b)(4) of the Act,\7\ in that it provides for the equitable
[[Page 53707]]
allocation of reasonable dues, fees, and other charges among the
Exchange's members. The Commission believes that the proposal should
allow the Exchange to more accurately charge LMMs the Exchange's true
costs when multiple options issues are transferred. Further, the
Commission believes that by making the proposal retroactive to January
1, 2002, the Exchange could make adjustments to past transfers in
accordance with the original intent of the fee.
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\6\ In approving the proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\7\ 15 U.S.C. 78f(b)(4).
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It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (SR-PCX-2005-68) and Amendment
No. 1 are approved.
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\8\ 15 U.S.C. 78s(b)(2).
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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Jonathan G. Katz,
Secretary.
[FR Doc. E5-4928 Filed 9-8-05; 8:45 am]
BILLING CODE 8010-01-P