5882 Federal Register / Vol. 69, No. 25 / Friday, February 6, 2004 / Notices 

10 15 U.S.C. 78q–1(b)(3)(F).

11 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See letter from Steven B. Matlin, Senior 

Counsel, Regulatory Policy, PCX to Nancy Sanow, 

Assistant Director, Commission, dated January 29, 

2004 (‘‘Amendment No. 1’’). In Amendment No. 1, 

the Exchange proposes to make technical 

corrections to the Schedule of Fees and Charges for 

Exchange Services, originally submitted as Exhibit 

A to the proposed rule change.

4See Securities Exchange Act Release No. 47786 

(May 2, 2003), 68 FR 24779 (May 8, 2003) (SR–

PCX–2003–08) (order approving pilot program).

5 15 U.S.C. 78f(b).

6 15 U.S.C. 78f(b)(4).

calculating a participant’s financial 

ability. 

The first modification to the rules 

requires broker-dealer participants to 

submit copies of supplemental reports 

filed pursuant to Rule 17a–11 to MBSCC 

concurrently with their submission to 

the Commission. Rule 17a–11 requires 

registered broker-dealers to notify the 

Commission of a decline in net capital 

below minimum requirements. In 

addition, MBSCC’s participants may 

have other similar regulatory 

notification requirements imposed by 

the SEC, another regulator, or other 

similar authority when their capital 

levels or other financial requirements 

fall below certain levels. This rule 

change also requires participants to 

submit such notifications to MBSCC 

concurrently with their submission to 

the relevant regulatory authority. Such 

notices should provide MBSCC with an 

early warning of potential financial 

problems with respect to its 

participants. 

The second modification allows 

MBSCC to use net asset value or other 

applicable indicia in calculating a 

participant’s financial ability. MBSCC’s 

rules do not currently specify the types 

of financial indicia that MBSCC may use 

to calculate a participant’s net worth for 

determining whether the participant 

meets MBSCC’s minimum financial 

requirements. MBSCC’s analysts 

currently use the appropriate financial 

indicia for each type of participant. For 

example, shareholders equity is used to 

determine the financial ability of a bank 

whereas net asset value is more 

appropriate for determining the 

financial ability of certain types of 

funds, such as most registered 

investment companies. This rule change 

will expand the language in MBSCC’s 

rules to permit use of the appropriate 

financial indicia. 

III. Discussion 

Section 17A(b)(3)(F) of the Act 

requires that the rules of a clearing 

agency be designed to assure the 

safeguarding of securities and funds 

which are in the custody or control of 

MBSCC.10 The rule change should help 

MBSCC to reduce risk by improving 

MBSCC’s ability to monitor and assess 

the financial condition of its 

participants. Accordingly, the proposed 

rule change should help MBSCC to 

protect the securities and funds in its 

possession or control or for which it is 

responsible. Therefore, the Commission 

finds that the rule change is consistent 

with section 17A(b)(3)(F).

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and in 

particular with the requirements of 

section 17A of the Act and the rules and 

regulations thereunder applicable. 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act, that the 

proposed rule change (File No. SR–

MBSCC–2001–06) as amended be and 

hereby is approved.

For the Commission by the Division of 

Market Regulation, pursuant to delegated 

authority.11

Jill M. Peterson, 

Assistant Secretary.

[FR Doc. 04–2555 Filed 2–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49164; File No. SR–PCX–

2004–03] 

Self-Regulatory Organizations; Notice 

of Filing and Order Granting 

Accelerated Approval of Proposed 

Rule Change and Amendment No. 1 

Thereto by the Pacific Exchange, Inc. 

Relating to the Extension of a Linkage 

Fee Pilot Program 

January 30, 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 January 

28, 2004, the Pacific Exchange, Inc. 

(‘‘Exchange’’ or ‘‘PCX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. On January 30, 2004, 

the PCX filed Amendment No. 1 to the 

proposed rule change.3 The Commission 

is publishing this notice to solicit 

comments on the proposed rule change, 

as amended, from interested persons 

and is approving the proposed rule 

change, as amended, on an accelerated 

basis.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to amend 

its Schedule of Fees and Charges For 

Exchange Services to extend until July 

31, 2004 the current pilot program 

regarding transaction fees charged for 

trades executed through the options 

intermarket linkage (‘‘Linkage’’).4

The proposed fee schedule is 

available at the Exchange 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 III 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 purpose of this proposed rule 

change is to extend for six months the 

pilot program establishing PCX fees for 

Principal (‘‘P’’) Orders and Principal 

Acting as Agent (‘‘P/A’’) Orders 

executed through Linkage. The fees 

currently are effective for a pilot 

program scheduled to expire on January 

31, 2004, and this filing would extend 

the fees through July 31, 2004. The two 

fees the PCX charges for P and P/A 

Orders are: the $.21 per contract side 

basic execution fees for trading on the 

PCX and a $.05 comparison fee per 

contract side. These are the same fees 

that all Exchange Members pay for noncustomer transactions executed on the 

PCX. The Exchange does not charge for 

the execution of Satisfaction Orders sent 

through Linkage and is not proposing to 

charge for such orders.

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act,5 in general, and Section 

6(b)(4)6, in particular, in that it provides 

for the equitable allocation of dues, fees 

Federal Register / Vol. 69, No. 25 / Friday, February 6, 2004 / Notices 5883

7 In approving this rule, the Commission notes 

that it has considered its impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f).

8 15 U.S.C. 78f(b).

9 15 U.S.C. 78f(b)(4).

10 15 U.S.C. 78s(b)(2).

11 Id.

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Letter from Edith Halihan, Deputy General 

Counsel, Phlx, to Nancy Sanow, Assistant Director, 

Division of Market Regulation, Commission, dated 

January 16, 2004 (‘‘Amendment No. 1’’). In 

Amendment No. 1, the Phlx made minor changes 

to the section of the proposed rule change 

describing its text to clarify the fee obligations for 

members associated with more than one member 

organization.

4 In its proposed demutualization, the Phlx is 

seeking to convert from a non-stock corporation 

into a stock corporation. The Exchange has 

submitted a separate proposed rule change relating 

to the proposed demutualization. See Securities 

Exchange Act Release No. 48847 (November 26, 

2003), 68 FR 67720 (December 3, 2003) (SR–Phlx–

2003–73). The Commission notes that it approved 

the demutualization in Securities Exchange Act 

Release No. 49098 (January 16, 2004) (SR–Phlx 

2003–73). As part of the demutualization, the 

Exchange intends to eliminate existing Exchange 

memberships; following demutualization, access to 

trading on the Exchange will be pursuant to permits 

rather than by ownership or leasing of Phlx 

memberships. The only class or series of permits to 

be outstanding initially will be denominated as 

‘‘Series A–1 Permits.’’ Until such time (if ever) as 

additional classes or series of permits are issued, 

the Series A–1 Permits will be referred to as 

‘‘permits’’ on the Exchange’s fee schedule.

and other charges among its members 

and other persons using its facilities for 

the purpose of executing P/A Orders or 

P Orders that are routed to the Exchange 

from other market centers.

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. 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. 

Comments may also be submitted 

electronically at the following e-mail 

address: rule-comments@sec.gov. All 

comment letters should refer to File No. 

SR-PCX–2004–03. 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, comments 

should be sent in hardcopy or by e-mail 

but not by both methods. 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 will also be 

available for inspection and copying at 

the principal office of the Exchange. All 

submissions should be submitted by 

February 26, 2004. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of 

Proposed Rule Change and Amendment 

No. 1 

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, 

applicable to a national securities 

exchange,7 and, in particular, with the 

requirements of section 6(b) of the Act 8

and the rules and regulations 

thereunder. The Commission finds that 

the proposed rule change, as amended, 

is consistent with Section 6(b)(4) of the 

Act,9 which requires that the rules of the 

Exchange provide for the equitable 

allocation of reasonable dues, fees, and 

other charges among its members and 

other persons using its facilities. The 

Commission believes that the extension 

of the Exchange’s Linkage fee pilot 

program until July 31, 2004 will give the 

Exchange and the Commission further 

opportunity to evaluate whether such 

fees are appropriate.

The Commission finds good cause, 

pursuant to Section 19(b)(2) of the 

Act,10 for approving the proposed rule 

change, as amended, prior to the 

thirtieth day after the date of 

publication of the notice of the filing 

thereof in the Federal Register. The 

Commission believes that granting 

accelerated approval of the proposed 

rule change, as amended, will preserve 

the Exchange’s existing pilot program 

for Linkage fees without interruption as 

the PCX and the Commission further 

consider the appropriateness of Linkage 

fees.

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,11 that the 

proposed rule change (SR-PCX–2004–

03), as amended, is hereby approved on 

an accelerated basis for a pilot period to 

expire on July 31, 2004.

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.12

Margaret H. McFarland, 

Deputy Secretary.

[FR Doc. 04–2554 Filed 2–5–04; 8:45 am] 

BILLING CODE 8010–01–P

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–49157; File No. SR–Phlx–

2004–02] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change and 

Amendment No. 1 Thereto by the 

Philadelphia Stock Exchange, Inc. 

Relating to Post-Demutualization Fees 

January 30, 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 January 7, 

2004, the Philadelphia Stock Exchange, 

Inc. (‘‘Phlx’’ 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 

Phlx has prepared. On January 20, 2004, 

the Exchange submitted Amendment 

No. 1 to the proposed rule change.3 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons.

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Phlx proposes to amend its 

schedule of dues, fees and charges to 

adopt permit fees in connection with 

the Exchange’s proposed 

demutualization.4 The fees relating to 

the issuance of Series A–1 Permits will