[Federal Register: May 26, 2004 (Volume 69, Number 102)]
[Notices]
[Page 29999-30000]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my04-116]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-49737; File No. SR-PCX-2004-36]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc.
Relating to Exchange Fees and Charges
May 19, 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 April 19, 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
the Exchange has prepared. The Exchange has designated this proposal as
one establishing or changing a due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-
4(f)(2) 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)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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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 the Trade-Related Charges portion of
its Schedule of Fees and Charges in order to modify applicability of
the broker-dealer transaction fee. Below is the text of the proposed
rule change, as amended. Proposed new language is in italics.
* * * * *
SCHEDULE OF FEES AND CHARGES FOR EXCHANGE SERVICES
PCX OPTIONS: TRADE-RELATED CHARGES
TRANSACTIONS
Customer: $0.00 per contract side
Firm: $0.10 per contract side for customer facilitation
Broker/Dealer: $0.21 per contract side *
* This fee will not apply to the transactions where a broker
dealer: (i) Is obligated to log onto the Auto-Ex wheel and satisfy
Auto-Ex transactions at a price set by another broker dealer, and (ii)
immediately offsets that Auto-Ex position to the member of the trading
crowd who directed that the bid (offer) be disseminated and available
for execution on Auto-Ex.
* * * * *
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 had 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 Exchange charges a standard rate of $0.21 per contract side for
transactions executed by broker-dealers on the Exchange. The Exchange
also offers performance incentives tied to market share and may adjust
the transaction fee to a sum between $0.05-$0.21 per contract side
depending upon the quality of a broker-dealer's performance. The
Exchange applies a transaction fee to all transactions, regardless of
whether they occur automatically or manually.
The Exchange proposes to amend its Schedule of Fees and Charges in
order to exclude certain transactions from the applicability of the
transaction fee. Specifically, the Exchange proposes not to apply the
fee to a transaction where the broker-dealer: (i) Is obligated to log
onto the Auto-Ex wheel and satisfy Auto-Ex transactions at a price set
by another broker-dealer and (ii) immediately offsets \5\ that Auto-Ex
position to the member of the trading crowd who directed that the bid
(offer) be disseminated and available for execution on Auto-Ex. The
Exchange believes that the proposed exclusion is equitable given that
the executing broker-dealer effects the transaction because of its
obligation to log onto the Auto-Ex wheel and is entitled to hold the
crowd market maker to his or her quote and offset the Auto-Ex position
by trading with the crowd market maker (who set the price).\6\
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\5\ The PCX confirmed that, if the broker-dealer who is
obligated to log onto the Auto-Ex wheel and satisfy the Auto-Ex
transaction at a price set by another broker-dealer does not offset
that Auto-Ex position immediately, then such broker-dealer will not
be entitled to receive the fee exclusion for the offset transaction.
See telephone conversation among Mai S. Shiver, Acting Director/
Senior Counsel, PCX; Susie Cho, Special Counsel, Division of Market
Regulation (``Division''), Commission; and David Hsu, Attorney,
Division, Commission, on May 17, 2004.
\6\ The PCX has represented that (i) it will surveil for the
situation in which the member of the trading crowd who directed that
the bid (offer) be disseminated and available for execution on Auto-
Ex also is the counterparty to the Auto-Ex trade and (ii) it will
inform the Division of the number of such trades that occur in the
six months following the effective date of the proposed rule change.
See telephone conversation among Mai S. Shiver, Acting Director/
Senior Counsel, PCX; Kim St. Hilaire, Vice President Strategic
Marketing, PCX; Susie Cho, Special Counsel, Division, Commission;
and David Hsu, Attorney, Division, Commission, on May 17, 2004.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and Section 6(b)(4) of the
Act,\8\ in particular, in that it provides for the equitable allocation
of reasonable dues, fees and other charges among its members.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
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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
The Exchange neither solicited nor received written comments with
respect to the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \9\ and subparagraph (f)(2) of Rule 19b-4
thereunder \10\ because it establishes or changes a due, fee, or other
charge imposed by the Exchange. At any time within 60 days after the
filing of the proposed rule change, the Commission may summarily
abrogate the 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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\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 17 CFR 240.19b-4(f)(2).
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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 rule-comments@sec.gov. Please include
File Number SR-PCX-2004-36 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-2004-36. 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
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-2004-36 and
should be submitted on or before June 16, 2004.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-11883 Filed 5-25-04; 8:45 am]
BILLING CODE 8010-01-P