[Federal Register: July 1, 2004 (Volume 69, Number 126)]
[Notices]
[Page 39995-39996]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy04-167]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49912; File No. SR-PCX-2004-47]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto by the Pacific Exchange, Inc. to
Eliminate the Ability to Manually Trade With Orders and Quotes With
Size in the Consolidated Book
June 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 June 10, 2004, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'')
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 the Exchange. On June 22, 2004, the
Exchange filed Amendment No. 1 to the proposed rule change.\3\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Steven B. Matlin, Senior Attorney, PCX, to
Nancy J. Sanow, Assistant Director, Division of Market Regulation,
Commission, dated June 21, 2004 (``Amendment No 1''). In Amendment
No. 1, the Exchange clarified the language describing the PCX Plus
platform in the Purpose section.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
PCX is proposing to eliminate the rule that allows a Market Maker
or Floor Broker to manually trade with orders and Quotes with Size \4\
in the Consolidated Book \5\ by vocalizing a bid or offer in a
particular series and effecting a trade with the Order Book Official.
The text of the proposed rule change appears below. Text to be deleted
is in brackets.
---------------------------------------------------------------------------
\4\ See PCX Rule 6.1(b)(33).
\5\ See PCX Rule 6.1(b)(37).
---------------------------------------------------------------------------
Rules of the Board of Governors of the Pacific Exchange, Inc.
Rule 6--Options Trading; Priority and Order Allocation Procedures
Rule 6.76(a)-(d)(1)(C)--No change.
[Rule 6.76(d)(2) Market Makers and Floor Brokers may trade with
orders and Quotes with Size in the Consolidated Book by vocalizing a
bid or offer in a particular series and effecting a trade with the
Order Book Official.]
Commentary .01-.02--No Change.
* * * * *
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. 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
Currently, PCX Rule 6.76(d)(2) permits Market Makers and Floor
Brokers to manually trade with orders and Quotes with Size in the
Consolidated Book by vocalizing a bid or offer in a particular series
and effecting a trade with the Order Book Official. The PCX represents
that the PCX Plus platform does not support the functionality required
by PCX Rule 6.76(d)(2) and that the PCX does not intend to develop such
functionality. As such, the PCX believes that it is necessary to remove
this provision from the Exchange's rules to conform the PCX rules to
currently available and contemplated future trading procedures. The
Exchange is not proposing to eliminate a Member's ability to trade with
orders and Quotes with Size in the Consolidated Book. Rather, the
Exchange chooses to have this type of trading available only on its
electronic platform, PCX Plus. Therefore, Market Makers and Floor
Brokers who wish to trade with orders and Quotes with Size in the
Consolidated Book may do so by obtaining and using the PCX Plus
platform.
In addition to the reason set forth above, the Exchange represents
that requiring Market Makers and Floor Brokers to manually interact
with an Order Book Official to execute a trade is not as efficient as
executing the trade electronically via PCX Plus. The Exchange also
represents that, because of the inefficiencies that exist with manual
interaction, no Exchange Members have requested this functionality.
Therefore, the Exchange believes that removing the rule permitting this
manual interaction will have no impact on the Exchange Members.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act \6\ in general and furthers the objectives
of 6(b)(5) of the Act \7\ in particular, because it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to foster cooperation and
coordination with persons engaged in facilitating transactions in
securities, and to remove impediments to and perfect the mechanism of a
free and
[[Page 39996]]
open market and a national market system.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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
No written comments were solicited or received with respect to the
proposed rule change.
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 Exchange 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-2004-47 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-2004-47. 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
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-2004-47 and should be submitted on or before July
22, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14971 Filed 6-30-04; 8:45 am]
BILLING CODE 8010-01-P