Document ID: SEC-2006-0464-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Pacific Exchange, Inc.
Posted Date: 2006-04-10T04:00Z

[Federal Register: April 10, 2006 (Volume 71, Number 68)]
[Notices]               
[Page 18130-18132]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap06-98]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53551; File No. SR-PCX-2006-05]

 
Self-Regulatory Organizations; The Pacific Exchange, Inc. (n/k/a 
``NYSE Arca, Inc.''); Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change and Amendment No. 1 Thereto Relating to Fees for 
Lead Market Makers, Transactions Within Exchange Traded Funds Listed on 
The New York Stock Exchange, Inc., and Registration and Transaction 
Fees for Equity Trading Permit Holders

March 27, 2006.
    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 30, 2006, The Pacific Exchange, Inc.\3\

[[Page 18131]]

(``PCX''), through its wholly owned subsidiary PCX Equities, Inc. 
(``PCXE''), filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II 
and III below, which Items were prepared by PCXE. On March 17, 2006, 
the NYSE Arca, Inc. (``Exchange''), through its wholly owned subsidiary 
NYSE Arca Equities, Inc. (``Arca Equities'') filed Amendment No. 1. The 
Exchange designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by a self-regulatory organization 
pursuant to Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ which renders the proposal effective upon filing with 
the Commission.\6\ The Commission is publishing this notice to solicit 
comments on the proposed rule change, as amended, from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On March 6, 2006, PCX filed a proposed rule change that 
amended its rules to reflect the following name changes: from 
Pacific Exchange, Inc. to NYSE Arca, Inc.; from PCX Equities, Inc. 
to NYSE Arca Equities, Inc.; from PCX Holdings, Inc., to NYSE Arca 
Holdings, Inc.; and from the Archipelago Exchange, L.L.C. to NYSE 
Arca, L.L.C. See SR-PCX-2006-24.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
    \6\ For purposes of calculating the 60-day abrogation period, 
the Commission considers the period to have commenced on March 17, 
2006, the date the Exchange filed Amendment No. 1.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through Arca Equities, proposes to amend its Schedule 
of Fees and Charges (``Schedule'') to (i) implement fees for 
transactions conducted by Lead Market Makers \7\ (``LMMs''); (ii) 
increase fees for transactions in Exchange Traded Funds (``ETFs'') 
listed on the New York Stock Exchange LLC (``NYSE''), and (iii) make 
other minor modifications to The Schedule. The text of the proposed 
rule change is available at the Commission, at the Exchange, and on the 
Exchange's Web site at http://www.archipelago.com/ regulation/

filings.asp#2006.
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    \7\ See Securities Exchange Act Release No. 52827 (November 23, 
2005), 70 FR 72139 (December 1, 2005) (SR-PCX-2005-56).
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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 received on the proposal. 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 proposes to amend the Schedule, effective February 1, 
2006, to reflect (i) charges and credits applicable to transactions by 
LMMs, (ii) an increase of transaction fees and elimination of market 
data revenue sharing credits for transactions in ETFs listed on the 
NYSE, (iii) the amended requirement of investigation fees associated 
with the review and approval of persons associated with an ETP 
Holder,\8\ (iv) removal of the fee for fingerprint card submission to 
the Exchange, and (v) an exemption of transaction fees for ETP Holder 
transactions occurring during the Closing Auction.\9\ The Schedule 
incorporating these changes may be found at the following Web address: 
http//http://www.arcaex.com/traders/ equities--fees.asp.

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    \8\ See Arca Equities Rule 1.1(n).
    \9\ See Arca Equities Rule 7.35.
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LMM Transaction Charges and Credits

    For LMMs, the exclusive Market-Maker in primary listings on the 
Exchange and who will be eligible to receive orders in the NYSE Arca, 
L.L.C.'s (``NYSE Arca'') Directed Order Process, the Exchange proposes 
to offer a $0.004 per share credit for orders submitted by LMMs that 
provide liquidity to the NYSE Arca Book, but not allow these 
transaction to be eligible for the Market Data Revenue Sharing Credit. 
Additionally, the Exchange will exempt LMMs from the transaction fees 
and credits for orders executed as a Direct Order against a Directed 
Fill \10\ but will charge $0.0025 per share for orders that remove 
liquidity from the NYSE Arca Book. Directed Fills will be eligible for 
Market Data Revenue Sharing Credit.
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    \10\ See Arca Equities Rule 7.31(j).
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Fees and Credits for NYSE Listed ETF Securities

    To maintain competitive fees, the Exchange proposes to amend the 
Schedule for ETP Holder transactions in NYSE listed ETF securities. 
With this, the Exchange proposes to implement a credit of $0.002 per 
share for limit orders of such securities residing on the NYSE Arca 
Book that execute against inbound marketable orders, but will eliminate 
the current Market Data Revenue Sharing Credit for Cross Orders \11\ 
involving NYSE listed ETFs. Additionally, current charges for NYSE 
listed ETFs are $0.001 per share for orders that execute against orders 
residing on the NYSE Arca Book and for orders that are routed away and 
executed by another market center or participant. The Exchange proposes 
to increase these fees to $0.003 and $0.004 per share, respectively.
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    \11\ See Arca Equities Rule 7.31(s).
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ETP Holder Registration Fees

    Currently, the Schedule reflects ETP Application Fees for 
investigations and fingerprints. Use of these fees, $125 and $35, 
respectively for each person \12\ requiring approval by the Exchange, 
has become outdated as the Exchange now utilizes and is a participant 
of the Central Registration Depository (``Web CRD[reg]'') system for 
electronic registration and review of criminal and disclosure 
background information. Previously, PCX was responsible for receipt and 
processing of fingerprint cards submitted for registration with the 
Exchange and for this would collect a $35 processing fee directly from 
the ETP Holder. Now, ETP Holders are required to maintain registration 
information electronically on Web CRD[reg] and submit fingerprint 
information directly to the National Association of Securities Dealers, 
Inc. (``NASD'') which maintains Web CRD[reg]. All fees relating to 
registrations and fingerprint information available on Web CRD[reg] are 
collected by NASD by deducting these fees from ETP Holders' Web 
CRD[reg] Daily Account. Individuals for whom information is not 
available on Web CRD[reg] and who must be reviewed and approved by the 
Exchange will continue to be required to pay the $125 investigation fee 
per individual.
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    \12\ See Arca Equities Rules 1.1(c) and 1.1(d) for Allied 
Persons and Approved Persons, respectively, requiring approval by 
the Exchange.
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Closing Auction Transaction Fee Exemption

    In order to be consistent with its practices, the Exchange proposes 
to clarify that ETP Holder transactions during the Closing Auction are 
exempted from Exchange transaction fees noted on the Schedule.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \13\ of the Act, in general, and Section 6(b)(4) \14\ of the Act, 
in particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among its ETP Holders, issuers, 
and other persons using its facilities.
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    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4).

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[[Page 18132]]

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 on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act,\15\ and paragraph (f)(2) of Rule 
19b-4 thereunder \16\ because it establishes or changes a due, fee, or 
other charge. 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
    \17\ See footnote 6 supra.
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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-2006-05 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-PCX-2006-05. 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 Room. Copies of such 
filing also will be available for inspection and copying at 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-
2006-05 and should be submitted on or before May 1, 2006.
    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).

Nancy M. Morris,
Secretary.
 [FR Doc. E6-5149 Filed 4-7-06; 8:45 am]

BILLING CODE 8010-01-P