[Federal Register: September 30, 2003 (Volume 68, Number 189)]
[Notices]
[Page 56369-56370]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30se03-164]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48532; File No. SR-PCX-2003-43]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by
the Pacific Exchange, Inc. Relating to the Elimination of the Posting
Period for New ETP Holder Applicants and To Eliminate PCXE Rule 2.3(b)
September 24, 2003.
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 August 26, 2003, 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
September 22, 2003, the PCX submitted 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See letter from Steven B. Matlin, Regulatory Policy, PCX, to
Geoffrey Pemble, Special Counsel, Division of Market Regulation
(``Division''), Commission, dated September 17, 2003. In Amendment
No. 1, the PCX noted that a sentence contained in its original
filing (``Furthermore, the Exchange believes the elimination of this
requirement is consistent with Section 6(b)(3) of the Act'') should
have been placed in the ``Basis'' section of the filing, rather than
the ``Purpose'' section. In addition, the Exchange provided
additional justification for its proposal under Section 6(b)(3) of
the Act. This additional text is contained in the ``Basis'' section
below.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PCX, through its wholly owned subsidiary PCX Equities, Inc.
(``PCXE''), proposes to amend its rules governing the Archipelago
Exchange, the equities trading facility of PCXE, by eliminating PCXE
Rule 2.3(b) that provides for a ten-day posting period of the name of
new ETP Holder applicants in the Exchange's Weekly Bulletin. The text
of the proposed rule change is available at the Office of the
Secretary, PCX and at the Commission.
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 PCX 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. The 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
As part of its continuing efforts to enhance participation on the
Archipelago Exchange (``ArcaEx'') facility, the PCX is proposing to
expedite the timeframe in which new ETP Holders \4\ shall be granted
approval for an ETP \5\ to effect transactions on the Exchange's
trading facility. The Exchange is proposing to eliminate PCXE Rule
2.3(b) so that the required posting period for new ETP Holders is
eliminated.
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\4\ See PCXE Rule 1.1(n) (definition of ``ETP Holder'').
\5\ See PCXE Rule 1.1(m) (definition of ``ETP'').
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The Exchange's current rules governing application procedures for
ETP Holders are set forth in PCXE Rule 2.3. Presently, Rule 2.3(b)
provides that upon receipt of an application for an ETP, the
applicant's name will be published for at least a ten calendar day
period in the Exchange's Weekly Bulletin before approving or rejecting
the application. Historically, membership-based exchanges in which
members have ownership and involvement in determining who should be
granted access to their facilities utilized posting rules to notify
members of parties interested in joining the exchange. The Exchange
believes that because PCXE is a demutualized organization in which
there are no ownership or voting rights, the posting period is not a
critical part of the application process. Accordingly, the Exchange
proposes to amend PCXE Rule 2.3 to eliminate subsection (b) that
defines the posting period. The Exchange intends to retain all other
aspects of the application process as noted in PCXE Rule 2.3 with
respect to determining whether to approve an application for an ETP
Holder.
The Exchange believes that the elimination of the aforementioned
posting process promotes a more efficient and effective market
operation by enabling Exchange access to new ETP Holders in a more
timely manner.
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 Section 6(b)(5),\7\ in particular, because it is designed
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 and perfect the
mechanisms of a free and open market and to protect investors and the
public interest.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(5).
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Furthermore, the Exchange believes the elimination of this
requirement is consistent with Section 6(b)(3) of the Act.\8\ While
PCXE is demutualized and therefore does not contain the traditional
approval process for its applicants as a membership based exchange, the
fair representation requirements of Section 6(b)(3) of the Act would
still be satisfied after the proposed rule change is approved through
the ETP representative on the PCX Board of Governors.\9\
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\8\ 15 U.S.C. 78f(b)(3).
\9\ See Amendment No. 1, supra note 3.
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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
Written comments were neither solicited nor received.
[[Page 56370]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has been filed by the Exchange as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A)(i) of the
Act \10\ and subparagraph (f)(6) of Rule 19b-4 thereunder.\11\
Consequently, because the foregoing proposed rule change: (1) does not
significantly affect the protection of investors or the public
interest, (2) does not impose any significant burden on competition,
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate, if consistent with the protection of investors and the
public interest, provided that the self-regulatory organization has
given the Commission written notice of its intent to file the proposed
rule change, along with a brief description and text of the proposed
rule change, at least five business days prior to the date of filing of
the proposed rule change, or such shorter time as the Commission may
designate, it has become effective pursuant to Section 19(b)(3)(A) of
the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
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\10\ 15 U.S.C. 78s(b)(3)(A)(i).
\11\ 17 CFR 240.19b-4(f)(6).
\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6).
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Pursuant to Rule 19b-4(f)(6)(iii),\14\ a proposed ``non-
controversial'' rule change does not become operative for 30 days after
the date of filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest. The PCX has requested that the Commission waive the 30-day
operative delay so that the proposed rule change will become
immediately effective upon filing.\15\
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\14\ 17 CFR 240.19b-4(f)(6)(iii).
\15\ In its original filing, PCX inadvertently also had
requested that the Commission waive the five day pre-filing period.
PCX had, in fact, already provided the Commission with the
appropriate five day notice. Telephone conference among Steven B.
Matlin, Peter D. Bloom, Regulatory Policy, PCX, and Geoffrey Pemble,
Special Counsel, Division, Commission (September 16, 2003).
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The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public
interest.\16\ Accelerating the operative date will allow for a more
efficient and effective market operation by enabling Exchange access to
new ETP Holders in a more timely manner. For this reason, the
Commission designates the proposed rule change to be effective and
operative immediately.
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\16\ For purposes of accelerating the operative date of this
proposal, the Commission has considered the proposed rule's impact
on efficiency, competition and capital formation. 15 U.S.C. 78c(f).
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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.\17\
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\17\ For purposes of calculating the 60-day abrogation period,
the Commission considers the period to commence on September 22,
2003, the date that the Exchange filed Amendment No. 1.
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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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 at the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
Exchange. All submissions should refer to the File No. SR-PCX-2003-43
and should be submitted by October 21, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-24759 Filed 9-29-03; 8:45 am]
BILLING CODE 8010-01-P