[Federal Register: April 15, 2005 (Volume 70, Number 72)]
[Notices]
[Page 19982-19983]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ap05-94]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51512; File No. SR-PCX-2004-124]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change and Amendments Nos. 1, 2, and 3 by the Pacific Exchange, Inc.
Relating to Adjournments of a Hearing Within Three Business Days of a
Scheduled Hearing Session
April 8, 2005.
On December 15, 2004, the Pacific Exchange, Inc. (``PCX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') 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 relating to amendments to PCX
Rules 12.6 and 12.18 and PCX Equities, Inc. (``PCXE'') Rules 12.7 and
12.19. On February 3, 2005, PCX filed Amendment No. 1 to the proposed
rule change.\3\ On the same day, PCX filed Amendment No. 2 to the
proposed rule change, which replaced Amendment No. 1 in its
entirety.\4\ On February 28, 2005, PCX filed Amendment No. 3 to the
proposed rule change.\5\ The proposed rule change, as amended, was
published for comment in the Federal Register on March 8, 2005.\6\ The
Commission received no 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\ See letter dated February 3, 2005 from Tania Blanford,
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director,
Division of Market Regulation.
\4\ See letter dated February 3, 2005 from Tania Blanford,
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director,
Division of Market Regulation.
\5\ See letter dated February 28, 2005 from Tania Blanford,
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director,
Division of Market Regulation.
\6\ Exchange Act Rel. No. 51296 (March 2, 2005), 70 FR 11304
(March 8, 2005).
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I. Description of Proposed Rule Change
The Exchange proposed amending PCX Rules 12.6 and 12.18 and PCXE
Rules 12.7 and 12.19 to modify the arbitration adjournment provision to
charge parties a fee of $100.00 per arbitrator in the event that a
hearing is adjourned within three business days of a scheduled hearing
session.
The Exchange has found that parties often seek to adjourn scheduled
hearing sessions at the last minute for various reasons, which may
include scheduling conflicts of parties or their counsel, ongoing
settlement discussions, or other personal matters unrelated to the
arbitration process. Regardless, last minute adjournments result in
inconvenience and lost income to the arbitrators. The Exchange,
therefore, proposed charging parties a nominal fee of $100.00 per
arbitrator in the event that a hearing is adjourned within three
business days of a scheduled hearing session.
The arbitrators will have discretion to allocate the fee among the
requesting parties, if more than one party requests the adjournment.
The arbitrators may also allocate all or a portion of the fee to the
non-requesting party or parties, if the arbitrators determine that the
non-requesting party or parties caused or contributed to the need for
the adjournment. In the event that an extraordinary circumstance
prevents a party or parties from making a timely adjournment request,
the arbitrators may use their discretion to waive the fee, provided
verification of such circumstance is received. The fee will not apply
to the adjournment of a pre-hearing session. It will, however, apply if
the parties agree to settle their dispute and one or more parties makes
an adjournment request within three business days before a scheduled
hearing session. This will be considered to be an adjournment request
that is made and granted for purposes of proposed PCX Rule 12.18 and
PCXE Rule 12.19.
The Exchange stated that it believes this fee is reasonable in
order to compensate arbitrators for their inconvenience due to last
minute adjournments.
II. Discussion and Findings
After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with the requirements of the Act
and the rules and regulations thereunder that are applicable to a
national securities exchange \7\ and, in particular, the requirements
of Section 6 of the Act \8\ and the rules and regulations thereunder.
Specifically, the Commission finds that the proposal is consistent with
Section 6(b) \9\ of the Act, in general, and Section 6(b)(5) \10\ of
the Act, in particular, in that it will promote just and equitable
principles of trade and protect investors and the public interest by
encouraging arbitrators to agree to serve in PCX arbitration
proceedings. The proposal is also consistent with Section 6(b)(4) \11\
of the Act in that it provides for the equitable allocation of
reasonable charges among PCX members and other persons using the PCX
arbitration forum.
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\7\ In approving this rule, the Commission notes that it has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ 15 U.S.C. 78f(b)(4).
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The Commission believes that the proposed rule change will promote
just and equitable principles of trade by providing PCX with an
effective means of addressing the problems associated with last minute
adjournments. The rule change should discourage frivolous adjournment
requests while promoting more efficient use of the arbitration process
by encouraging parties, when
[[Page 19983]]
appropriate, to settle their disputes early to avoid additional fees.
Compensating arbitrators for their inconvenience due to last minute
adjournments should help PCX maintain a pool qualified arbitrators by
assuring arbitrators of some compensation in the event that a scheduled
hearing is adjourned at the last minute. In sum, the Commission
believes that, by providing a more efficient and effective forum for
investors to address grievances, the proposed rule change will serve to
protect investors and the public interest. Moreover, the Commission
believes that the proposed rule change will provide for the equitable
allocation of the new adjournment fee among PCX members and other
persons using the PCX arbitration forum, and that the new fee is
reasonable.
III. Conclusion
For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder.
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\12\ that the proposed rule change (SR-PCX-2004-124) be, and it
hereby is, approved.
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\12\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1784 Filed 4-14-05; 8:45 am]
BILLING CODE 8010-01-P