Document ID: SEC-2005-0450-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Pacific Exchange, Inc.
Posted Date: 2005-12-29T05:00Z

[Federal Register: December 29, 2005 (Volume 70, Number 249)]
[Notices]               
[Page 77232-77233]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de05-114]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52995; File No. SR-PCX-2005-140]

 
Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Pacific Exchange, Inc. Relating to the NASD PCX Agreement

December 21, 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 December 21, 2005, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by PCX. On 
December 21, 2005, PCX filed Amendment No. 1 to the proposed rule 
change. PCX filed the proposed rule change pursuant to Section 
19(b)(3)(A) of the Act \3\ 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, 
as amended, 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).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    PCX is proposing to amend its undertaking to extend for 90 days 
from the date of this filing the time period by which PCX will amend 
the agreement between the National Association of Securities Dealers 
(``NASD'') and PCX currently in place pursuant to Rule 17d-2 under the 
Act \5\ (the ``NASD PCX Agreement''). As described in more detail 
below, the amendment to the NASD PCX Agreement will expand the scope of 
the NASD's regulatory responsibility.
---------------------------------------------------------------------------

    \5\ 17 CFR 240.17d-2.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, 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 IV below. 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 Commission recently approved a proposed rule change in relation 
to the acquisition of PCX Holdings, Inc. by Archipelago Holdings, Inc. 
(``Archipelago Holdings'').\6\ In its filing with the Commission, PCX 
committed to amend the NASD PCX Agreement within 90 days of the 
Commission's approval of SR-PCX-2005-90 to expand the scope of the 
NASD's regulatory functions under the NASD PCX Agreement so as to 
encompass all of the regulatory oversight and enforcement 
responsibilities with respect to the broker-dealer affiliate of 
Archipelago Holdings, Archipelago Securities, L.L.C. (``Archipelago 
Securities'').\7\ The 90-day period expires on December 21, 2005, and 
while the PCX and NASD have executed an amended NASD PCX Agreement, the 
PCX and NASD have not yet filed the amended NASD PCX Agreement with the 
Commission.
---------------------------------------------------------------------------

    \6\ Securities Exchange Act Release No. 52497 (September 22, 
2005); 70 FR 56949 (September 29, 2005) (approving SR-PCX-2005-90 as 
amended).
    \7\ Archipelago Securities acts as the outbound order router for 
the Archipelago Exchange and, as such, is regulated as an exchange 
``facility'' of the PCX and PCXE.
---------------------------------------------------------------------------

    The PCX believes that an extension of time for an additional 90 
days from the date of this filing to amend the PCX NASD Agreement will 
give the Commission staff sufficient time to publish and take action on 
the proposal. There is currently a plan in place (i.e., the NASD PCX 
Agreement) allocating to the NASD the responsibility to receive 
regulatory reports from Archipelago Securities, to examine Archipelago 
Securities for compliance and to enforce compliance by Archipelago 
Securities with the Act, the rules and regulations thereunder and the 
rules of the NASD, and to carry out other specified regulatory 
functions with respect to

[[Page 77233]]

Archipelago Securities. The Exchange notes that the current NASD PCX 
Agreement will remain in full force and effect during the interim 
period and PCX will continue to abide by the terms of the agreement. 
Furthermore, the PCX undertakes to file a proposed amendment to the 
NASD PCX Amendment with the Commission on or before January 4, 2006. 
The PCX believes the requested extension of time is consistent with the 
Act and the rules and regulations thereunder, and will neither 
significantly affect the protection of investors or the public interest 
nor impose any significant burden on competition.
2. Basis
    For the reasons discussed above, the Exchange believes that the 
proposed rule change is consistent with the Act and the rules and 
regulations thereunder and, in particular, the requirements of Section 
6(b) of the Act.\8\ Specifically, the Exchange believes the proposed 
rule change is consistent with the Section 6(b)(5) \9\ requirement that 
the rules of an exchange be designed to promote just and equitable 
principles of trade, to remove impediments to and perfect the mechanism 
for a free and open market and a national market system, and, in 
general to protect investors and the public interest.\10\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ See Amendment No. 1.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change, as 
amended, 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

    Because the foregoing proposed rule change, as amended, does not:
    (i) Significantly affect the protection of investors or the public 
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was 
filed, or such shorter time as the Commission may designate, it has 
become effective pursuant to Section 19(b)(3)(A) of the Act\11\ and 
Rule 19b-4(f)(6) thereunder.\12\ 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 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
    Pursuant to Rule 19b-4(f)(6)(iii) under the Act, the Exchange is 
required to give the Commission written notice of its intent to file 
the proposed rule change, along with a brief description and text of 
the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change, or such shorter time as 
designated by the Commission. The Commission has determined to waive 
this requirement. The Commission notes that the Exchange did provide 
notice of the filing two business days prior to the date of filing.
---------------------------------------------------------------------------

    PCX has asked the Commission to waive the 30-day operative delay. 
The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Because the original 90-day time period expires on December 21, 2005, 
such waiver will allow the PCX to remain in compliance with its 
undertaking to amend the NASD PCX Agreement. The Commission notes that 
PCX represents that it has executed, but not yet filed with the 
Commission, an amended NASD PCX Agreement with the NASD, and that PCX 
has undertaken to file a proposed amendment to the NASD PCX Agreement 
on or before January 4, 2006. The Commission further notes that the 
NASD PCX Agreement currently in place will remain in full force and 
effect during the interim period and PCX will continue to abide by the 
terms of the agreement. For these reasons the Commission designates the 
proposal to be effective and operative upon filing with the 
Commission.\13\
---------------------------------------------------------------------------

    \13\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rules impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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-2005-140 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-PCX-2005-140. 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. 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-
2005-140 and should be submitted on or before January 19, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. E5-8056 Filed 12-28-05; 8:45 am]

BILLING CODE 8010-01-P