Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Q Orders, 44136-44138 [E5-4082]
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44136
Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Notices
Nasdaq has requested that the
Commission waive the five-day notice
requirement and 30-day operative delay
period so that the proposed rule change
will be immediately operative. The
Commission notes that the proposed
rule change will not introduce any new
changes to the current level of access to
Nasdaq’s Brut Facility, but will merely
extend the access that is currently
available to non-NASD members
through Brut for an additional five
months. The Commission also notes that
the current rule granting non-NASD
members access to Nasdaq’s Brut
Facility expires on July 31, 2005.
Therefore, the Commission has
determined to waive the five-day notice
requirement and 30-day operative delay
because such waiver will enable Nasdaq
to implement the rule immediately and
avoid any lapse in Brut access for nonNASD members.8
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.
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.
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 rulecomments@sec.gov. Please include File
Number SR–NASD–2005–088 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–NASD–2005–088. 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
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of the NASD. 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–NASD–2005–088 and
should be submitted on or before
August 22, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4088 Filed 7–29–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52109; File No. SR–PCX–
2005–72]
Self-Regulatory Organizations; Pacific
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Q Orders
July 22, 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 June 7,
2005, the Pacific Exchange, Inc. (‘‘PCX’’
or ‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in items I and II
below, which items have been prepared
by the Exchange. On July 6, 2005, the
Exchange amended the proposed rule
change (‘‘Amendment No. 1’’).3 The
1 15
8 For
purposes only of waiving the 30-day
operative delay only, the Commission has
considered the proposed rule’s impact on
efficiency, competition and capital formation. See
15 U.S.C. 78c(f).
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Jkt 205001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, the Exchange inserted the
Statutory Basis section, which had been
inadvertently omitted, and corrected the language
set forth in Item III. The effective date of the original
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2 17
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Exchange has designated the proposed
rule change as ‘‘non-controversial’’
under section 19(b)(3)(A) of the Act 4
and Rule 19b–4(f)(6) thereunder,5 which
renders the proposed rule change
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange, through its wholly
owned subsidiary PCX Equities, Inc.
(‘‘PCXE’’), proposes to amend its rules
governing the Archipelago Exchange
(‘‘ArcaEx’’), the equities trading facility
of PCXE. With this filing, the Exchange
proposes to modify its Q Order
definition. The text of the proposed rule
change is set forth below. Proposed new
language is in italics; proposed
deletions are in [brackets].
*
*
*
*
*
Rule 7
Equities Trading
Orders and Modifiers
Rule 7.31 (a)–(j)—No Change.
(k) Q Order
(1) A Q Order is a limit order
submitted to the Archipelago Exchange
by a Market Maker.
(A) A Market Maker may instruct the
Archipelago Exchange before 6:28 a.m.
(Pacific Time) to enter a Q Order on
their behalf as follows:
(1) At the last price and size entered
by the Market Maker during the
previous trading day, either including or
excluding reserve size;
(2) At a specified percentage from the
best bid or offer;
(3) At the standard Q defined as $0.01
bid and 2 times the previous day’s close
for the offer with specified display and
reserve sizes.
Upon execution, the Q Order entered
pursuant to the above instructions will
automatically repost with the original
size and $10 below the original bid or
$10 above the original offer, but never
below $0.01.
Rule 7.31(k)(2)–(h)(h)—No Change.
*
*
*
*
*
proposed rule change is June 7, 2005, and the
effective date of the amendment is July 6, 2005. For
purposes of calculating the 60-day period within
which the Commission may summarily abrogate the
proposed rule change, as amended, under section
19(b)(3)(C) of the Act, the Commission considers
the period to commence on July 6, 2005, the date
on which the PCX submitted Amendment No. 1.
See 15 U.S.C. 78s(b)(3)(C).
4 15 U.S.C. 78s(b)(3)(A).
5 17 CFR 240.19b–4(f)(6).
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Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Notices
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 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
As part of its continuing efforts to
enhance participation on the ArcaEx
facility, the PCX is proposing to modify
its Q Order definition. In particular, the
Exchange seeks to provide Market
Makers with the option to instruct
ArcaEx to submit a Q Order on their
behalf.
Currently, PCXE Rule 7.31(k)
describes Q Orders as a limit order
submitted to the Exchange by a Market
Maker. As part of their Market Maker
obligations, pursuant to PCXE Rule 7.23,
Market Makers are required to maintain
continuous, two-sided Q Orders in the
securities in which the Market Maker is
registered to trade. In order to assist the
Market Makers with this obligation, the
Exchange proposes to offer functionality
in which the Market Makers could
choose to have the Exchange enter and
maintain a Q Order on their behalf. At
6:28 a.m. Pacific time, the Exchange
would extract information submitted by
the Market Maker that provides specific
quote instructions for the Exchange to
enter a quote on the Market Maker’s
behalf. Specifically, the Market Maker
would instruct ArcaEx to enter a Q
Order based on one of the following
options:
(1) At the last price and size entered
by the Market Maker during the
previous trading day, either including or
excluding reserve size;
(2) At a specified percentage from the
best bid or offer; or
(3) At the standard Q defined as $0.01
bid and 2 times the previous day’s close
for the offer with specified display and
reserve sizes.
Conversely, the Market Maker could
choose to enter their own Q Order, or
request that their previous day’s Q
Order be canceled. In addition, upon
execution of the Q Order that was
entered according to one of the
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aforementioned options, the Exchange
would automatically repost the Q Order
with the original size and $10 below the
original bid or above the original offer,
but never below $0.01. Lastly, in an
instance of a bulk cancel, the Exchange
would not automatically cancel Q
orders.
The proposed rule change would be
similar to Nasdaq Stock Market rules
that were recently published in the
Federal Register for immediate
effectiveness.6 In particular, Nasdaq
proposed functionality for Nasdaq
Quoting Market Participants to instruct
Nasdaq to open their quotes based on a
variety of choices.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with section 6(b)
of the Act,7 in general, and furthers the
objectives of section 6(b)(5) of the Act,8
in particular, in that it is designed to
facilitate transactions in securities, to
promote just and equitable principles of
trade, to enhance competition and to
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 inappropriate 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 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, if consistent with the
protection of investors and the public
interest, it has become effective
pursuant to section 19(b)(3)(A) of the
6 See Securities Exchange Act Release No. 51522
(April 11, 2005), 70 FR 20955 (April 22, 2005) (SR–
NASD–2005–050).
7 15 U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(5).
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44137
Act 9 and Rule 19b–4(f)(6) thereunder.10
The PCX has requested that the
Commission waive the 30-day operative
delay for ‘‘non-controversial’’ proposals
because the proposed rule change is
similar to rules in effect on the Nasdaq
Stock Market. The Commission believes
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest
because the proposal would allow the
PCX to offer market makers a means by
which to manage their Q Orders. In
addition, the proposal would introduce
a functionality that is similar to one in
effect on The Nasdaq Stock Market. For
this reason, the Commission designates
the proposal to be effective and
operative upon filing with the
Commission.11
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.
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.
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 rulecomments@sec.gov. Please include File
Number SR–PCX–2005–72 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9309.
All submissions should refer to File
Number SR–PCX–2005–72. This file
number should be included on the
subject line if e-mail is used. To help the
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). The Commission notes
that PCX provided 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.
11 For purposes only of waiving the 30-day
operative delay of the proposed rule change, the
Commission considered the proposed rule’s impact
on efficiency, competition, and capital formation.
15 U.S.C. 78c(f).
10 17
E:\FR\FM\01AUN1.SGM
01AUN1
44138
Federal Register / Vol. 70, No. 146 / Monday, August 1, 2005 / Notices
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
Room. Copies of the 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–2005–72 and should
be submitted on or before August 22,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–4082 Filed 7–29–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52114; File No. SR–Phlx–
2005–44]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change and Amendment Nos. 1 and 2
Thereto Relating to Payment for Order
Flow Program
July 22, 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 July 1,
2005, the Philadelphia Stock Exchange,
Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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14:01 Jul 29, 2005
Jkt 205001
have been prepared by the Exchange.
On July 20, 2005, the Phlx submitted
Amendment No. 1 to the proposed rule
change.3 On July 21, 2005, the Phlx
submitted Amendment No. 2 to the
proposed rule change.4 The Phlx has
designated this proposal as one
changing a fee imposed by the Phlx
under Section 19(b)(3)(A)(ii) of the Act 5
and Rule 19b–4(f)(2) thereunder,6 which
renders the proposal, as amended,
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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx proposes to amend its equity
options payment for order flow program
as follows: (1) A payment for order flow
fee will be assessed only on
electronically delivered orders, thus
payment for order flow fees will not be
assessed on non-electronically delivered
orders, i.e., floor brokered orders; (2)
payment for order flow fees will
increase from $0.40 to $0.60 per
contract for all options other than
Nasdaq-100 Index Tracking StockSM
traded under the symbol QQQQ
(‘‘QQQQ’’),7 and iShares FTSE/Xinhua
China Index Fund (‘‘FXI Options’’), an
exchange-traded fund; (3) the payment
for order flow fee will decrease from
$1.00 to $0.75 for options on QQQQ; (4)
Directed ROTs may elect to be assessed
or not to be assessed a payment for
order flow fee for orders directed to
them; and (5) Directed ROTs will no
3 In Amendment No. 1, the Exchange: (1) Revised
the proposed rule text to clarify the provision on
the return of any excess payment for order flow
funds that are billed but not reimbursed to
specialists; (2) revised the purpose section to clarify
that Directed Registered Options Traders (‘‘Directed
ROTs’’) may elect to be assessed or not to be
assessed a payment for order flow fee and to clarify
the example of how payment for order flow
reimbursement is calculated; and (3) made several
technical corrections to the proposed rule change.
4 In Amendment No. 2, the Exchange made a
technical correction to the proposed rule text.
5 15 U.S.C. 78s(b)(3)(A)(ii).
6 17 CFR 240.19b–4(f)(2).
7 The Nasdaq-100, Nasdaq-100 Index, Nasdaq,
The Nasdaq Stock Market, Nasdaq-100 SharesSM,
Nasdaq-100 TrustSM, Nasdaq-100 Index Tracking
StockSM, and QQQSM are trademarks or service
marks of The Nasdaq Stock Market, Inc. (‘‘Nasdaq’’)
and have been licensed for use for certain purposes
by the Philadelphia Stock Exchange pursuant to a
License Agreement with Nasdaq. The Nasdaq-100
Index (‘‘Index’’) is determined, composed, and
calculated by Nasdaq without regard to the
Licensee, the Nasdaq-100 TrustSM, or the beneficial
owners of Nasdaq-100 SharesSM. The Exchange
states that Nasdaq has complete control and sole
discretion in determining, comprising, or
calculating the Index or in modifying in any way
its method for determining, comprising, or
calculating the Index in the future.
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longer be able to request reimbursement
for payment for order flow paid to order
flow providers.
Equity Options Payment for Order Flow
Program in Effect Beginning June 2,
2005 8
Beginning June 2, 2005, the Exchange
established a payment for order flow
program to take into account Directed
Orders 9 pursuant to new Exchange Rule
1080(l).10 Pursuant to Exchange Rule
1080(l), Exchange specialists,11 SQTs 12
and RSQTs 13 trading on the Exchange’s
electronic options trading platform,
Phlx XL,14 may receive Directed Orders
from Order Flow Providers.15
8 On June 2, 2005, the Exchange filed to amend
its payment for order flow program effective as a
pilot program for trades involving payment for
order flow and Directed ROTs settling on or after
June 2, 2005 through May 27, 2006. See Securities
Exchange Act Release No. 51909 (June 22, 2005), 70
FR 37484 (June 29, 2005) (SR–Phlx–2005–37).
Although the Commission subsequently abrogated
SR–Phlx–2005–37 on July 7, 2005, it was in effect
until the filing of the current proposal, SR–Phlx–
2005–44, on July 1, 2005. See Securities Exchange
Act Release No. 51984 (July 7, 2005), 70 FR 40413
(July 13, 2005).
9 The term ‘‘Directed Order’’ means any customer
order to buy or sell which has been directed to a
particular specialist, Remote Streaming Quote
Trader (‘‘RSQT’’) (as defined below), or Streaming
Quote Trader (‘‘SQT’’) (defined below) by an Order
Flow Provider (as defined below). The provisions
of Exchange Rule 1080(l) are in effect for a one-year
pilot period to expire on May 27, 2006. See
Securities Exchange Act Release No. 51759 (May
27, 2005), 70 FR 32860 (June 6, 2005) (SR–Phlx–
2004–91).
10 See Securities Exchange Act Release No. 51909
(June 22, 2005), 70 FR 37484 (June 29, 2005) (SR–
Phlx–2005–37).
11 The Exchange uses the terms ‘‘specialist’’ and
‘‘specialist unit’’ interchangeably herein.
12 An SQT is an Exchange Registered Options
Trader (‘‘ROT’’) who has received permission from
the Exchange to generate and submit option
quotations electronically through an electronic
interface with AUTOM via an Exchange approved
proprietary electronic quoting device in eligible
options to which such SQT is assigned. AUTOM is
the Exchange’s electronic order delivery, routing,
execution and reporting system, which provides for
the automatic entry and routing of equity option
and index option orders to the Exchange trading
floor. See Exchange Rules 1014(b)(ii) and 1080.
13 An RSQT is an Exchange ROT that is a member
or member organization of the Exchange with no
physical trading floor presence who has received
permission from the Exchange to generate and
submit option quotations electronically through
AUTOM in eligible options to which such RSQT
has been assigned. An RSQT may only submit such
quotations electronically from off the floor of the
Exchange. An RSQT may only trade in a market
making capacity in classes of options in which he
is assigned. See Exchange Rule 1014(b)(ii)(B). See
Securities Exchange Act Release Nos. 51126
(February 2, 2005), 70 FR 6915 (February 9, 2005)
(SR–Phlx–2004–90) and 51428 (March 24, 2005), 70
FR 16325 (March 30, 2005) (SR–Phlx–2005–12).
14 In July 2004, the Exchange began trading equity
options on Phlx XL, followed by index options in
December 2004. See Securities Exchange Act
Release No. 50100 (July 27, 2004), 69 FR 46612
(August 3, 2004) (SR–Phlx–2003–59).
15 The term ‘‘Order Flow Provider’’ means any
member or member organization that submits, as
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]]>Agencies
[Federal Register Volume 70, Number 146 (Monday, August 1, 2005)]
[Notices]
[Pages 44136-44138]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4082]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52109; File No. SR-PCX-2005-72]
Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Q Orders
July 22, 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 June 7, 2005, the Pacific Exchange, Inc. (``PCX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in items I and II below, which items
have been prepared by the Exchange. On July 6, 2005, the Exchange
amended the proposed rule change (``Amendment No. 1'').\3\ The Exchange
has designated the proposed rule change as ``non-controversial'' under
section 19(b)(3)(A) of the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\
which renders the proposed rule change effective upon filing with the
Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, the Exchange inserted the Statutory
Basis section, which had been inadvertently omitted, and corrected
the language set forth in Item III. The effective date of the
original proposed rule change is June 7, 2005, and the effective
date of the amendment is July 6, 2005. For purposes of calculating
the 60-day period within which the Commission may summarily abrogate
the proposed rule change, as amended, under section 19(b)(3)(C) of
the Act, the Commission considers the period to commence on July 6,
2005, the date on which the PCX submitted Amendment No. 1. See 15
U.S.C. 78s(b)(3)(C).
\4\ 15 U.S.C. 78s(b)(3)(A).
\5\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange, through its wholly owned subsidiary PCX Equities,
Inc. (``PCXE''), proposes to amend its rules governing the Archipelago
Exchange (``ArcaEx''), the equities trading facility of PCXE. With this
filing, the Exchange proposes to modify its Q Order definition. The
text of the proposed rule change is set forth below. Proposed new
language is in italics; proposed deletions are in [brackets].
* * * * *
Rule 7
Equities Trading
Orders and Modifiers
Rule 7.31 (a)-(j)--No Change.
(k) Q Order
(1) A Q Order is a limit order submitted to the Archipelago
Exchange by a Market Maker.
(A) A Market Maker may instruct the Archipelago Exchange before
6:28 a.m. (Pacific Time) to enter a Q Order on their behalf as follows:
(1) At the last price and size entered by the Market Maker during
the previous trading day, either including or excluding reserve size;
(2) At a specified percentage from the best bid or offer;
(3) At the standard Q defined as $0.01 bid and 2 times the previous
day's close for the offer with specified display and reserve sizes.
Upon execution, the Q Order entered pursuant to the above
instructions will automatically repost with the original size and $10
below the original bid or $10 above the original offer, but never below
$0.01.
Rule 7.31(k)(2)-(h)(h)--No Change.
* * * * *
[[Page 44137]]
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 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
As part of its continuing efforts to enhance participation on the
ArcaEx facility, the PCX is proposing to modify its Q Order definition.
In particular, the Exchange seeks to provide Market Makers with the
option to instruct ArcaEx to submit a Q Order on their behalf.
Currently, PCXE Rule 7.31(k) describes Q Orders as a limit order
submitted to the Exchange by a Market Maker. As part of their Market
Maker obligations, pursuant to PCXE Rule 7.23, Market Makers are
required to maintain continuous, two-sided Q Orders in the securities
in which the Market Maker is registered to trade. In order to assist
the Market Makers with this obligation, the Exchange proposes to offer
functionality in which the Market Makers could choose to have the
Exchange enter and maintain a Q Order on their behalf. At 6:28 a.m.
Pacific time, the Exchange would extract information submitted by the
Market Maker that provides specific quote instructions for the Exchange
to enter a quote on the Market Maker's behalf. Specifically, the Market
Maker would instruct ArcaEx to enter a Q Order based on one of the
following options:
(1) At the last price and size entered by the Market Maker during
the previous trading day, either including or excluding reserve size;
(2) At a specified percentage from the best bid or offer; or
(3) At the standard Q defined as $0.01 bid and 2 times the previous
day's close for the offer with specified display and reserve sizes.
Conversely, the Market Maker could choose to enter their own Q
Order, or request that their previous day's Q Order be canceled. In
addition, upon execution of the Q Order that was entered according to
one of the aforementioned options, the Exchange would automatically
repost the Q Order with the original size and $10 below the original
bid or above the original offer, but never below $0.01. Lastly, in an
instance of a bulk cancel, the Exchange would not automatically cancel
Q orders.
The proposed rule change would be similar to Nasdaq Stock Market
rules that were recently published in the Federal Register for
immediate effectiveness.\6\ In particular, Nasdaq proposed
functionality for Nasdaq Quoting Market Participants to instruct Nasdaq
to open their quotes based on a variety of choices.
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\6\ See Securities Exchange Act Release No. 51522 (April 11,
2005), 70 FR 20955 (April 22, 2005) (SR-NASD-2005-050).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\7\ in general, and furthers the objectives of section
6(b)(5) of the Act,\8\ in particular, in that it is designed to
facilitate transactions in securities, to promote just and equitable
principles of trade, to enhance competition and to protect investors
and the public interest.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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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 inappropriate 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 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, if
consistent with the protection of investors and the public interest, it
has become effective pursuant to section 19(b)(3)(A) of the Act \9\ and
Rule 19b-4(f)(6) thereunder.\10\ The PCX has requested that the
Commission waive the 30-day operative delay for ``non-controversial''
proposals because the proposed rule change is similar to rules in
effect on the Nasdaq Stock Market. The Commission believes that waiver
of the 30-day operative delay is consistent with the protection of
investors and the public interest because the proposal would allow the
PCX to offer market makers a means by which to manage their Q Orders.
In addition, the proposal would introduce a functionality that is
similar to one in effect on The Nasdaq Stock Market. For this reason,
the Commission designates the proposal to be effective and operative
upon filing with the Commission.\11\
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). The Commission notes that PCX
provided 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.
\11\ For purposes only of waiving the 30-day operative delay of
the proposed rule change, the Commission considered the proposed
rule's impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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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.
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. 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-2005-72 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9309.
All submissions should refer to File Number SR-PCX-2005-72. This
file number should be included on the subject line if e-mail is used.
To help the
[[Page 44138]]
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 Room. Copies of the 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-
2005-72 and should be submitted on or before August 22, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4082 Filed 7-29-05; 8:45 am]
BILLING CODE 8010-01-P
