Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendments Nos. 1, 2, and 3 by the Pacific Exchange, Inc., Relating to Adjournments of a Hearing Within Three Business Days of a Scheduled Hearing Session, 11304-11305 [E5-966]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 44 (Tuesday, March 8, 2005)]
[Notices]
[Pages 11304-11305]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-966]



[[Page 11304]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51296; File No. SR-PCX-2004-124]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendments Nos. 1, 2, and 3 by the Pacific Exchange, Inc., 
Relating to Adjournments of a Hearing Within Three Business Days of a 
Scheduled Hearing Session

March 2, 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 15, 2004, 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, II and III below, which Items have been prepared by PCX. On 
February 3, 2005, PCX filed Amendment No. 1 to the proposed rule 
change.\3\ On the same day, PCX filed Amendment No. 2 to the proposed 
rule change, which replaced Amendment No. 1 in its entirety.\4\ On 
February 28, 2005, PCX filed Amendment No. 3 to the proposed rule 
change.\5\ 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.
    \3\ See letter dated February 3, 2005 from Tania Blanford, 
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director, 
Division of Market Regulation.
    \4\ See letter dated February 3, 2005 from Tania Blanford, 
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director, 
Division of Market Regulation.
    \5\ See letter dated February 28, 2005 from Tania Blanford, 
Regulatory Staff Attorney, to Nancy Sanow, Assistant Director, 
Division of Market Regulation.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    PCX is proposing to amend the PCX Options and PCX Equities, Inc., 
arbitration rules, PCX Rule 12.18 and PCXE Rule 12.19, respectively, in 
order to modify the arbitration adjournment provision. PCX is also 
proposing to amend PCX Rule 12.6 and PCXE Rule 12.7, respectively, to 
provide that if the parties agree to settle their dispute, they will 
remain responsible for payment of fees incurred, including fees for 
previously scheduled hearing sessions and fees incurred as a result of 
adjournments pursuant to PCX Rule 12.18(d) or PCXE Rule 12.19(d).\6\ 
Below is the text of the proposed rule change. Proposed new language is 
in italics; proposed deletions are in [brackets]. Because the proposed 
changes to PCX Rule 12.6 and PCX Rule 12.18 are identical to the 
proposed changes to PCXE Rule 12.7 and PCXE Rule 12.19, only the PCX 
rules appear below (the PCXE rules have not been included).
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    \6\ Telephone conversation between Tania Blanford, Regulatory 
Staff Attorney, PCX, and Lourdes Gonzalez, Assistant Chief Counsel--
Sales Practices, Division of Market Regulation, SEC, February 28, 
2005 regarding conforming PCX's Statement of the Terms of Substance 
of the Proposed Rule Change section of its Notice of Filing of 
Proposed Rule Change Relating to Adjournments of a Hearing Within 
Three Business Days of a Scheduled Hearing Session with the changes 
to the text of PCX Rules 12.6 and 12.18 and PCXE Rules 12.7 and 
12.19 proposed by Amendment No. 2.
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* * * * *

Rules of the Pacific Exchange, Inc.

Rule 12 Arbitration

* * * * *

Settlements

    Rule 12.6 (a) All settlements upon any matter submitted shall be at 
the election of the parties.
    (b) If the parties agree to settle their dispute, they will remain 
responsible for payment of fees incurred, including fees for previously 
scheduled hearing sessions and fess incurred as a result of 
adjournments, pursuant to Rule 12.18(d).
* * * * *

Adjournments

    Rule 12.18 (a)-(c)--No change.
    (d) If an adjournment request is made by one or more parties and 
granted within three business days of a scheduled hearing session, not 
including prehearing sessions, the party or parties making the request 
shall pay an additional fee of $100 per arbitrator to compensate the 
arbitrator for the inconvenience due to last minute adjournments. If 
more than one party requests the adjournment, the arbitrators shall 
allocate the $100 per arbitrator fee among the requesting parties. The 
arbitrators may allocate all or a portion of the $100 per arbitrator 
fee to the non-requesting party or parties, if the arbitrators 
determine that the non-requesting party or parties caused or 
contributed to the need for the adjournment. In the event that a 
request results in the adjournment of consecutively scheduled hearing 
sessions, the additional fee will be assessed only for the first of the 
consecutively scheduled hearing sessions. In the event that an 
extraordinary circumstance prevents a party or parties from making a 
timely adjournment request, arbitrators may use their discretion to 
waive the fee, provided verification of such circumstance is received.
* * * * *

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

Purpose
    The Exchange proposes to amend PCX Rules 12.6 and 12.18 and PCXE 
Rules 12.7 and 12.19 to modify the arbitration adjournment provision to 
charge parties a fee of $100.00 per arbitrator in the event that a 
hearing is adjourned within three business days of a scheduled hearing 
session.
    The Exchange has found that parties often seek to adjourn scheduled 
hearing sessions at the last minute for various reasons, which may 
include scheduling conflicts of parties or their counsel, ongoing 
settlement discussions, or other personal matters unrelated to the 
arbitration process. Regardless, last minute adjournments result in 
inconvenience and lost income to the arbitrators. The Exchange, 
therefore, proposes to charge parties a nominal fee of $100.00 per 
arbitrator in the event that a hearing is adjourned within three 
business days of a scheduled hearing session. The fee will not apply to 
the adjournment of a pre-hearing session. It will, however, apply if 
the parties agree to settle their dispute and one or more parties makes 
an adjournment request within three business days before a scheduled 
hearing session. This will be considered to be an adjournment request 
that is made and granted for purposes of proposed PCX Rule 12.18 and 
PCXE Rule 12.19.\7\
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    \7\ Telephone conversation between Tania Blanford, Regulatory 
Staff Attorney, PCX, and Lourdes Gonzalez, Assistant Chief Counsel--
Sales Practices, Division of Market Regulation, SEC, February 28, 
2005 regarding conforming PCX's Statement of the Purpose of, and 
Statutory Basis for the Proposed Rule Change of its Notice of Filing 
of Proposed Rule Change Relating to Adjournments of a Hearing Within 
Three Business Days of a Scheduled Hearing Session with the changes 
to the text of PCX Rules 12.6 and 12.18 and PCXE Rules 12.7 and 
12.19 proposed by Amendment No. 2.

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[[Page 11305]]

    The arbitrators will have discretion to allocate the fee among the 
requesting parties, if more than one party requests the adjournment. 
The arbitrators may also allocate all or portion of the fee to the non-
requesting party or parties, if the arbitrators determine that the non-
requesting party or parties caused or contributed to the need for the 
adjournment. In the event that an extraordinary circumstance prevents a 
party or parties from making a timely adjournment request, the 
arbitrators may use their discretion to waive the fee, provided 
verification of such circumstance is received.
    The Exchange believes this fee is reasonable in order to compensate 
arbitrators for their inconvenience due to last minute adjournments.
Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \8\ of the Act, in general, and Section 6(b)(5) \9\ of the Act, in 
particular, in that it will promote just and equitable principles of 
trade; facilitate transactions in securities, remove impediments to and 
perfect the mechanisms of a free and open market and a national market 
system; and protect investors and the public interest.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve the proposed modifications, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-PCX-2004-124 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-PCX-2004-124. 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 (https://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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. 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-
2004-124 and should be submitted on or before March 29, 2005.

Margaret H. McFarland,
Deputy Secretary.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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[FR Doc. E5-966 Filed 3-7-05; 8:45 am]
BILLING CODE 8010-01-P