[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Notices]
[Pages 37189-37190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15715]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48031; File No. SR-PCX-2003-25]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc.
Relating to Exchange Fees and Charges
June 13, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on May 30, 2003, the Pacific Exchange, Inc. (``PCX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PCX is proposing to amend its Schedule of Fees and Charges by
modifying its Order Cancellation Fees. The text of the proposed rule
change is set forth below. Proposed new language is in italics;
proposed deletions are in [brackets].
* * * * *
Schedule of Fees and Charges for Exchange Services
PCX OPTIONS: TRADE-RELATED CHARGES
Transactions: No change.
Order Cancellation: $1.00 per MFI order canceled.
Except as provided herein, the fee [O]only applies to orders
canceled through the MFI in any month where the total number of orders
canceled through the MFI by the executing Clearing Member exceeds the
total number of orders that same firm executed through the MFI in that
same month. This fee does not apply to executing Clearing Members
canceling less than 500 orders through the MFI in a month. The MFI fee
will also not apply to cancel requests on invalid orders (the option
has already expired and the Exchange has purged it from its system);
invalid symbols (a symbol that does not refer to a valid option traded
on the Exchange); or invalid series (a series that is not recognized by
or traded on the Exchange).
[[Page 37190]]
Ticket Data Entry: No change.
On-Line Comparison: No change.
LMM Book Operation Credit: No change.
* * * * *
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 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. 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 has established an Order Cancellation Fee in order to
address operational problems and costs resulting from the practice of
market participants canceling orders immediately after they place such
orders through the Exchange's Member Firm Interface (``MFI'').\3\ While
the fee was intended to temper activity among trading participants who
immediately cancel orders without routing significant order flow to the
Exchange, it was not intended to penalize Member Firms that, due to
their systems formulas, must cancel orders that are deemed invalid and
which they are not able to fill. Thus, if a Member Firm sends in an
order that is not eligible for execution because it is an invalid order
(the option has already expired and the Exchange has purged it from its
system); has an invalid symbol (a symbol that does not refer to a valid
option traded on the Exchange); or refers to an invalid series (a
series that is not recognized or traded by the Exchange); such order
will be rejected from the Exchange's system and the Member Firm will
have to enter a cancel request in order to remove the ineligible order
from its internal systems. These types of cancels are not the type of
cancels that the Exchange's MFI Cancellation Fee was intended to, or
should, redress. In order to ensure that this fee continues to mitigate
excessive cancellations while not disadvantaging Member Firms that
provide cancel requests for ineligible orders, the Exchange proposes to
modify its MFI cancellation selection criteria to exclude cancels on
invalid orders, invalid series or invalid symbols from the
applicability of the MFI Cancellation Fee. The Exchange believes that
this proposed modification to its Schedule of Fees continues to fulfill
the stated purpose of the MFI Cancellation Fee.
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\3\ See Securities Act Release No. 45262 (January 9, 2002), 67
FR 2266 (January 16, 2002) (SR-PCX-2001-47).
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2. Statutory Basis
The Exchange believes that the proposal is consistent with section
6(b) of the Act,\4\ in general, and section 6(b)(4) of the Act,\5\ in
particular, in that it provides for the equitable allocation of
reasonable fees among its members.
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\4\ 15 U.S.C. 78f(b).
\5\ 15 U.S.C. 78f(b)(4).
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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 rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act \6\ and subparagraph (f)(2) of Rule 19b-4
\7\ thereunder because it changes a fee imposed by the PCX. At any time
within 60 days of the filing of such 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.\8\
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\6\ 15 U.S.C. 78s(b)(3)(A)(ii).
\7\ 17 CFR 240.19b-4(f)(2).
\8\ See 15 U.S.C. 78(b)(3)(C).
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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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 will also be
available for inspection and copying at the principal office of the
PCX. All submissions should refer to File No. SR-PCX-2003-25 and should
be submitted by July 14, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-15715 Filed 6-20-03; 8:45 am]
BILLING CODE 8010-01-P