[Federal Register Volume 70, Number 11 (Tuesday, January 18, 2005)]
[Notices]
[Page 2918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-159]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51014; File No. SR-PCX-2004-83]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change, and Amendment No. 1 Thereto, by the Pacific Exchange, Inc. 
Relating To Changing the Opening Time and the Commencement of the 
Opening Auction on the Archipelago Exchange

January 10, 2005.
    On October 22, 2004, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange''), through its wholly owned subsidiary PCX Equities, Inc. 
(``PCXE'') submitted to 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 change the opening time and the commencement of 
the Opening Auction of its facility, the Archipelago Exchange 
(``ArcaEx''), from 5 a.m. (Pacific time) to 1 a.m. (Pacific time) and 
modify PCXE Rules 7.34 and 7.35, respectively. On November 22, 2004, 
the PCX submitted Amendment No. 1 to the proposed rule change.\3\ The 
Federal Register published the proposed rule change for comment on 
December 6, 2004.\4\ The Commission received no comments on the 
proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaced and superceded the original filing 
in its entirety.
    \4\ Securities Exchange Act Release No. 50756 (November 30, 
2004), 69 FR 70489.
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    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder that are applicable to a national 
securities exchange.\5\ In particular, the Commission believes that the 
proposed rule change is consistent with Section 6(b) of the Act,\6\ in 
general, and furthers the objectives of Section 6(b)(5),\7\ in 
particular, because it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, and to 
remove impediments and perfect the mechanisms of a free and open market 
and to protect investors and the public interest. The Commission 
believes that the proposed rule change is reasonably designed to 
provide additional liquidity for customers seeking to participate in 
the Nasdaq-listed and exchange-listed markets by extending the ArcaEx's 
Opening Auction during the hours before the primary markets open for 
trading. The Commission believes that having a PCX Market Management 
staff member on-site at the ArcaEx facility beginning at 1 a.m. 
(Pacific time), in conjunction with the Exchange's employment of third-
party data vendors, should enable the Exchange to coordinate its 
trading halts with those that are instituted for regulatory reasons by 
the primary markets, including the foreign markets with whom the PCX 
represents it is establishing contacts. In addition, this arrangement 
should permit the Exchange to exercise its discretion to institute a 
trading halt on ArcaEx when the trading halt is for a non-regulatory 
reason.
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    \5\ In approving this rule, 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).
    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    Further, the Commission recognizes that the Exchange has 
represented that the PCX Market Management staff member will be able to 
monitor the quoting and trading activity of its Users \8\ during that 
time period. In addition, the Commission notes that the Exchange has 
represented that it will not begin trading at 1 a.m. (Pacific time) 
until the Securities Information Processors (``SIPs'' are ready to 
accommodate quoting and trading beginning at 1 a.m. (Pacific time) and 
have provided ArcaEx with notification that they are prepared to 
disseminate quotes and trades at that time. The Commission believes 
that this pre-condition to commencing trading a 1 a.m. (Pacific time) 
is appropriate because the quote and trade data disseminated by SIPs 
are fundamental to market transparency.
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    \8\ See PCXE Rule 1.1(yy).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change, as amended, (SR-PCX-2004-83) be, 
and it hereby is, approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-159 Filed 1-14-05; 8:45 am]
BILLING CODE 8010-01-P