regulatory organizations; proposed rule changes: Pacific Exchange, Inc.,

[Federal Register: April 18, 2002 (Volume 67, Number 75)]

[Notices]

[Page 19292-19293]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr18ap02-131]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45748; File No. SR-PCX-2002-15]

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 by the Pacific Exchange, Inc. To Adopt a Volume Discount Program for Market Makers

April 12, 2002.

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 February 28, 2002, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'') filedwith the Securities and Exchange Commission (``Commission'' or ``SEC'') the proposed rule change as described in Items I, II and III below, which Items have been prepared by the Exchange. On April 11, 2002, the Exchange amended the proposal. \3\ The Exchange has designated this proposal as one establishing or changing a due, fee, or other charge imposed by the CHX under section 19(b)(3)(A)(ii) of the Act, \4\ which renders the proposal 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. 768s(b)(1).

\2\ 17 CFR 240.196-4.

\3\ See April 10, 2002 letter from Cindy L. Sink, Senior Attorney, Regulatory Policy, PCX, to Joseph Morra, Special Counsel, Division of Market Regulation, SEC and attachments (``Amendment No. 1''). In Amendment No. 1, the PCX (1) provided a new Exhibit A that replaces and supersedes the Exhibit A that was filedwith the original proposed rule change; and (2) clarified that the Volume Discount Program for Market Makers applies to all market makers, including Lead Market Makers, regardless of individual performance, whenever the overall volume on the Exchange reaches the designated amounts. For purposes of calculating the 60-day abrogation period, the Commission considers the period to have commenced on April 11, 2002, the date the PCX filedAmendment No. 1.

\4\ 15 U.S.C. 78s(b)(3)(A)(ii).

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

   The Exchange proposes to adopt a Volume Discount Program for Market Makers (``Program''). The Program is intended to provide PCX members with rebates once the PCX reaches volume levels that are adequate to sustain the operating and capital investment needs of the Exchange. The text of the proposed rule change is below. Additions are in italics. PCX Options: Trade-Related Charges * * * * *

   Volume Discount Program

   Per contract reduction in PCX quarterly average daily contract market maker transaction volume

   charge for following quarter

   449,000 or lower.......................... No reduction. 450,000 to 474,999........................ $0.01. 475,000 to 499,999........................ $0.02. 500,000 to 524,999........................ $0.03. 525,000 or higher......................... $0.04.

   * * * * *

2. 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 its proposal and discussed any comments it received regarding the proposal. The text of these 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.

   [[Page 19293]]

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

      1. Purpose

      The Exchange proposes to adopt the Program, which is intended to provide PCX members with rebates once the PCX reaches volume levels that are adequate to sustain the operating and capital investment needs of the Exchange. The Program provides rate relief to market makers by reducing the market maker transaction charge once the PCX achieves certain volume thresholds. The volume thresholds will be calculated on a quarterly basis, and any rate reduction will be for the following quarter. The quarterly volume thresholds and corresponding quarterly market maker rate reduction for the following quarter are listed in Section I above.

      The first rate reduction will be for the second quarter of 2002, dependent on the PCX's quarterly average daily contract volumes for the first quarter of 2002. The volume discount is adjusted quarterly based on the PCX's prior quarter average daily contract volume. For example, if PCX volumes for the first quarter of 2002 average 475,000 contracts and the volumes for the second quarter average 425,000 contracts, the per contract reduction in the market maker transaction charge for the second quarter will be $0.02, even though second quarter volumes are below the level qualifying for a discount, and there will be no volume discount for the third quarter, regardless of PCX's third quarter volumes. 2. Statutory Basis

      The Exchange believes the proposal is consistent with the requirements of section 6(b) of the Act,\5\ in general, and furthers the objectives of Section 6(b)(4),\6\ in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its members.

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

      \6\ 15 U.S.C. 78f(b)(4).

   2. 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.

   3. 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.

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

   The proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act \7\ and subparagraph (f)(2) of Rule 19b-4 thereunder,\8\ because it involves a due, fee, or other charge. At any time within 60 days of the filing of the 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.

   \7\ 15 U.S.C. 78s(b)(3)(A)(ii).

   \8\ 17 CFR 240.19b-4(f)(2).

4. Solicitation of Comments

   Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal 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 filedwith 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 number SR-PCX-2002-15 and should be submitted by May 9, 2002.

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\9\

   \9\ 17 CFR 200.30-3(a)(12).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 02-9481Filed4-17-02; 8:45 am]

   BILLING CODE 8010-01-P