[Federal Register Volume 69, Number 27 (Tuesday, February 10, 2004)]
[Notices]
[Pages 6356-6357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2811]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49176; File No. SR-PCX-2003-59]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Granting Approval to a Proposed Rule Change and Amendment No. 1 Thereto 
by the Pacific Exchange, Inc. To Amend Its Rules Governing Market-Maker 
Obligations on the Archipelago Exchange

February 3, 2004.
    On October 21, 2003, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly-owned subsidiary PCX Equities, Inc. 
(``PCXE''), filed with the Securities and Exchange Commission 
(``Commission''), 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 to amend its rules governing Market Maker 
obligations on the Archipelago Exchange (``ArcaEx''), the equities 
trading facility of PCXE. The PCX filed Amendment No. 1 to the proposal 
on December 2, 2003.\3\ The proposed rule change, as amended, was 
published for comment in the Federal Register on December 29, 2003.\4\ 
The Commission received no comment letters 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\ Amendment No. 1 replaces the originally filed Form 19b-4 in 
its entirety.
    \4\ See Securities Exchange Act Release No. 48928 (December 16, 
2003), 68 Fr 75010 (December 29, 2003).
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    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 \5\ 
and, in particular, the requirements of Section 6 of the Act \6\ and 
the rules and regulations thereunder. Specifically, the Commission 
believes that the proposed rule change is consistent with Section 
6(b),\7\ which, among other things, requires that the PCX's rules be 
designed to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest. 
The Commission notes that the PCX's restrictions on Market Makers 
requiring them to become odd-lot dealers and to maintain cleanup orders 
in the securities in which they maintain a market currently impose a 
competitive barrier vis-[agrave]-vis other market centers in attracting 
Market Maker participation on ArcaEx because competing market centers 
do not impose such requirements.\8\ The Commission notes that the 
Exchange believes that eliminating the aforementioned requirements will 
facilitate additional Market Maker participation on ArcaEx and will 
further enhance order interaction, provide greater depth in liquidity, 
and foster price competition. Moreover, the Exchange believes that the 
elimination of such requirements will place ArcaEx on a level playing 
field with other market centers and allow ArcaEx to fairly compete for 
Market Maker,\9\ and that the impact on the system from removing these 
requirements for Market Makers would be minimal on the ArcaEx.
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    \5\ In approving this proposed rule change, the Commission notes 
that it has considered its impact on efficiency, competition, and 
capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b).
    \8\ See e.g., NASD Rules 4611 and 4612.
    \9\ See note 4, supra.

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[[Page 6357]]

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change and Amendment No. 1 thereto 
(File No. SR-PCX-2003-59) are approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    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. 04-2811 Filed 2-9-04; 8:45 am]
BILLING CODE 8010-01-P