Document ID: SEC-2005-0224-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Pacific Exchange, Inc.
Posted Date: 2005-11-10T05:00Z

[Federal Register: November 10, 2005 (Volume 70, Number 217)]
[Notices]               
[Page 68505]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10no05-166]                         

[[Page 68505]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52732; File No. SR-PCX-2005-98]

 
Self-Regulatory Organizations; Pacific Exchange, Inc.; Order 
Approving Proposed Rule Change and Amendment No. 1 Thereto to Amend the 
Minor Rule Plan and Recommended Fine Schedule in Connection with Rules 
Regarding Principal Orders, Principal Acting as Agent Orders, and 
Limitations on Principal Order Access

November 3, 2005.
    On August 16, 2005, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') 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 Minor Rule Plan (``MRP'') and 
Recommended Fine Schedule under PCX Rule 10.12 with respect to 
provisions of the PCX Options Linkage program (``Linkage'') that relate 
to Principal Orders (``P Orders''), Principal Acting as Agent Orders 
(``P/A Orders''), and Limitations on Principal Order Access 
(collectively, ``Linkage Rules''). On September 27, 2005, PCX filed 
Amendment No. 1 to the proposed rule change. The proposed rule change, 
as amended, was published for comment in the Federal Register on 
October 4, 2005.\3\ The Commission received no comments regarding the 
proposal.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52523 (September 28, 
2005), 70 FR 57918.
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    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission believes that the proposal is consistent 
with section 6(b)(5) of the Act,\5\ because a rule that is reasonably 
designed to require Exchange members to comply with its Linkage Rules 
should help protect investors and the public interest. The Commission 
also believes that handling violations of Linkage Rules pursuant to the 
MRP is consistent with sections 6(b)(1) and 6(b)(6) of the Act,\6\ 
which require that the rules of an exchange enforce compliance with, 
and provide appropriate discipline for, violations of Commission and 
Exchange rules. In addition, because existing PCX Rule 10.12 provides 
procedural rights to a person fined under the MRP to contest the fine 
and permits a hearing on the matter, the Commission believes the MRP, 
as amended by this proposal, provides a fair procedure for the 
disciplining of members and persons associated with members, consistent 
with sections 6(b)(7) and 6(d)(1) of the Act.\7\
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    \4\ In approving this proposed rule change, 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).
    \5\ 15 U.S.C. 78f(b)(5).
    \6\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \7\ 15 U.S.C. 78f(b)(7) and 78f(d)(1).
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    Finally, the Commission finds that the proposal is consistent with 
the public interest, the protection of investors, or otherwise in 
furtherance of the purposes of the Act, as required by Rule 19d-1(c)(2) 
under the Act \8\ which governs minor rule violation plans. The 
Commission believes that the proposed change to the MRP will strengthen 
the Exchange's ability to carry out its oversight and enforcement 
responsibilities as a self-regulatory organization in cases where full 
disciplinary proceedings are unsuitable in view of the minor nature of 
the particular violation.
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    \8\ 17 CFR 240.19d-1(c)(2).
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    In approving this proposed rule change, the Commission in no way 
minimizes the importance of compliance with PCX rules and all other 
rules subject to the imposition of fines under the MRP. The Commission 
believes that the violation of any self-regulatory organization's 
rules, as well as Commission rules, is a serious matter. However, the 
MRP provides a reasonable means of addressing rule violations that do 
not rise to the level of requiring formal disciplinary proceedings, 
while providing greater flexibility in handling certain violations. The 
Commission expects that PCX will continue to conduct surveillance with 
due diligence and make a determination based on its findings, on a 
case-by-case basis, whether a fine of more or less than the recommended 
amount is appropriate for a violation under the MRP or whether a 
violation requires formal disciplinary action under PCX Rules 10.4 and 
10.12(f).
    It is therefore ordered, pursuant to section 19(b)(2) of the Act 
\9\ and Rule 19d-1(c)(2) under the Act,\10\ that the proposed rule 
change (SR-PCX-2005-98), as amended, be, and hereby is, approved and 
declared effective.
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    \9\ 15 U.S.C. 78s(b)(2).
    \10\ 17 CFR 240.19d-1(c)(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); 17 CFR 200.30-3(a)(44).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-22452 Filed 11-9-05; 8:45 am]

BILLING CODE 8010-01-P