Document ID: SEC-2005-0102-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Pacific Exchange, Inc.
Posted Date: 2005-10-12T04:00Z

[Federal Register: October 12, 2005 (Volume 70, Number 196)]
[Notices]               
[Page 59385-59386]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc05-115]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52561; File No. SR-PCX-2005-107]

 
Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Amending 
Rules Regarding Lead Market Maker's Guaranteed Participation in Trades 
Executed by Public Outcry

October 4, 2005.
    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 September 23, 2005, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') 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. The PCX filed 
the proposal as a ``non-controversial'' proposed rule change pursuant 
to Section 19(b)(3)(A)(iii) \3\ of the Act and Rule 19b-4(f)(6) 
thereunder,\4\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The PCX proposes to amend PCX Rule 6.82(d) to better describe a 
Lead Market Maker's (``LMM'') guaranteed participation on trades that 
are executed via public outcry. The text of the proposed rule change, 
is available on the PCX's Web site (http://www.pacificex.com), at the 

PCX's principal office, and at the Commission's Public Reference Room.

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 proposed rule change. The 
text of those 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
    The Exchange submits that the purpose of the proposed rule change 
is to adopt clarifying language to better describe an LMM's guaranteed 
participation in trades that occur via public outcry. The Commission 
recently approved changes to PCX rules pertaining to LMMs.\5\ These 
changes allow an LMM to operate from a location other than the PCX 
trading floor.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 51937 (June 29, 
2005), 70 FR 38997 (July 6, 2005) (SR-PCX-2005-31).
---------------------------------------------------------------------------

    According to the Exchange, its intention at all times was that if 
an LMM is not present on the trading floor they will not be entitled to 
a 40% guaranteed participation (as specified in PCX Rule 6.82(d)(2)) on 
any trade that occurs in the trading crowd via public outcry. While 
this provision was described in the purpose statement of SR-PCX-2005-
31, the PCX at this time feels that a change to the rule text will 
clarify when an LMM is actually entitled to their guaranteed 
participation on trades in accordance with Rule 6.82(d)(2). The 
proposed rule change now clearly states that LLMs will be entitled to 
their 40% guaranteed participation on public outcry trades only when 
they are preset in the trading crowd.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations under the Act applicable to a 
national securities exchange and, in particular, the requirements of 
Section 6(b) of the Act.\6\ Specifically, the Exchange believes the 
proposed rule change is consistent with the Section 6(b)(5) \7\ 
requirements that rules of an exchange be designed to facilitate 
transactions in securities, to promote just and equitable principles of

[[Page 59386]]

trade, to enhance competition and to protect investors and the public 
interest.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The PCX neither solicited nor received comments on the proposal.

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

    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) does not become operative for 30-days from the date on which it 
was filed, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to section 19(b)(3)(A) of the Act \8\ and 
Rule 19b-4(f)(6) thereunder.\9\ A proposed rule change filed under 
Commission Rule 19b-4(f)(6) \10\ normally does not become operative 
prior to 30 days after the date of filing. The PCX requests that the 
Commission waive the 30-day operative delay, as specified in Rule 19b-
4(f)(6)(iii), and designate the proposed rule change to become 
operative immediately. The Commission believes that waiving the 30-day 
operative delay is consistent with the protection of investors and the 
public interest because such waiver will allow the PCX to immediately 
clarify its rule governing LMM's guaranteed participation in trades 
that occur by public outcry. Accelerating the operative date will allow 
for a more efficient and effective market operation by offering clarity 
to existing PCX rules. For these reasons, the Commission designates the 
proposed rule change as effective and operative immediately.\11\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ Id.
    \11\ For the purposes only of waiving 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).
---------------------------------------------------------------------------

    At any time within 60 days after the filing of the proposed rule 
change, the Commission may summarily abrogate the 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.

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 2005-107 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-PCX-2005-107. 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 
principal office of the PCX. 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 2005-107 and 
should be submitted on or before November 2, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E5-5581 Filed 10-11-05; 8:45 am]

BILLING CODE 8010-01-P