Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto by the Pacific Exchange, Inc. To Create a New Order Type-Passive Liquidity Orders-for Use in the ArcaEx Trading Facility of the PCX, 55441-55443 [05-18762]
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Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices
2. Statutory Basis
Electronic Comments
The proposed rule change is
consistent with Section 6(b) of the Act,3
in general, and furthers the objectives of
Section 6(b)(5) of the Act,4 in particular,
in that it is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to,
and perfect the mechanism of, a free and
open market and a national market
system, and in general, to protect
investors and the public interest.
• 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–NYSE–2005–62 on the
subject line.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposed rule change will impose no
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
The Exchange has neither solicited
nor received comments on this
proposal.
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 such proposed
rule change, 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 is consistent with the Act.
Comments may be submitted by any of
the following methods:
3 15
4 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
VerDate Aug<31>2005
14:40 Sep 20, 2005
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–9303.
All submissions should refer to File
Number SR-NYSE–2005–62. 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 offices of NYSE. 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-NYSE–2005–62 and should
be submitted on or before October 12,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.5
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18766 Filed 9–20–05; 8:45 am]
BILLING CODE 8010–01–P
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55441
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52436; File No. SR–PCX–
2005–53]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto by
the Pacific Exchange, Inc. To Create a
New Order Type—Passive Liquidity
Orders—for Use in the ArcaEx Trading
Facility of the PCX
September 14, 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 April 15,
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, II, and
III below, which Items have been
prepared by the PCX. On June 3, 2005,
the PCX filed Amendment No. 1 to the
proposed rule change.3 On August 26,
2005, the PCX filed Amendment No. 2
to the proposed rule change.4 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 PCX, 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 add one new order type, the Passive
Liquidity Order (‘‘PL Order’’). The
changes described in this rule proposal
would add new Rule 7.31(h)(4) and
amend existing Rule 7.37(b).
The text of the proposed rule change,
as amended, appears below. Additions
are in italics. Deleted items are in
brackets.
*
*
*
*
*
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1, which replaced the original
filing, made technical and clarifying changes to the
proposed rule change.
4 Amendment No. 2, which replaced Amendment
No. 1, clarified the execution priority of Passive
Liquidity orders in PCXE Rule 7.37, as compared
to other orders that are part of the Display Order
Process and the Working Order Processes, and as
compared to Directed Fills in the Display Order
Process. In addition, Amendment No. 2 made other
technical and clarifying changes to the proposed
rule change.
2 17
E:\FR\FM\21SEN1.SGM
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55442
Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices
Rule 7
subsection, the size of an incoming
Reserve Order includes the displayed
and reserve size, and the size of the
portion of the Reserve Order resident in
the Display Order Process is equal to its
displayed size. If the incoming
marketable order has not been executed
in its entirety, the remaining part of the
order shall be routed to the Working
Order Process.
(B)—No Change.
Rule 7.37(b)(2)
(2) Step 3: Working Order Process.
(A) An incoming marketable order
shall be matched for execution against
orders in the Working Order Process in
the following manner:
(i) An incoming marketable order
shall be matched against orders within
the Working Order Process in the order
of their ranking, at the price of the
displayed portion (or in the case of an
All-or-None Order, at the limit price or
in the case of a Passive Liquidity Order,
at its price), for the total amount of stock
available at that price or for the size of
the incoming order, whichever is
smaller.
Rule 7.37(b)(2)(A)(ii)–(d)—No Change.
*
*
*
*
*
Equities Trading
Rule 7.31(a)–(g)—No Change
(h) Working Order. Any order with a
conditional or undisplayed price and/or
size designated as a ‘‘Working Order’’ by
the Corporation, including, without
limitation:
(1)–(3)—No Change
(4) Passive Liquidity Order. An order
to buy or sell a stated amount of a
security at a specified, undisplayed
price. Passive Liquidity Orders will be
executed in the Working Order Process
after all other Working Orders except
undisplayed discretionary order
interest. Passive Liquidity Orders with a
price superior to that of Directed Fills
will have price priority and will execute
ahead of inferior priced Directed Fills in
the Directed Order Process. Passive
Liquidity Orders with a price superior to
that of displayed orders will have price
priority and will execute ahead of
inferior priced displayed orders in the
Display Order Process.
*
*
*
*
*
Rule 7.37
(a) Step 1: Directed Order Process.
During Core Trading Hours only, orders
may be matched and executed in the
Directed Order Process as follows:
(1) If a User submits a marketable
Directed Order to the Archipelago
Exchange and the User’s designated
Market Maker has a standing instruction
for a Directed Fill to the Archipelago
Exchange, the Directed Order shall be
executed against the Directed Fill of the
designated Market Maker, unless there
is a Passive Liquidity Order as defined
in PCXE Rule 7.31(h) with a price
superior to that of the Directed Fill, in
which case the Passive Liquidity Order
will have price priority and will execute
ahead of inferior priced Directed Fills in
the Directed Order Process.
(2)–(4)—No Change.
(b) If an incoming marketable order
has not been executed in its entirety
pursuant to paragraph (a) of this Rule,
any remaining part of the order shall be
routed to the Display Order Process.
(1) Step 2: Display Order Process.
(A) An incoming marketable order
shall first attempt to be matched for
execution against orders in the Display
Order Process at the display price of the
resident order for the total amount of
stock available at that price or for the
size of the incoming order, whichever is
smaller. Passive Liquidity Orders as
defined in PCXE Rule 7.31(h) with a
price superior to that of displayed
orders will have price priority and will
execute ahead of inferior priced
displayed orders in the Display Order
Process. For the purposes of this
VerDate Aug<31>2005
14:40 Sep 20, 2005
Jkt 205001
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 Exchange proposes to add a
new order type for use by Users.5 The
new order type, the PL Order, is an
order to buy or sell a stated amount of
a security at a specified, undisplayed
price.
PL Order Type Features
A PL Order would be an order to buy
or sell a stated amount of a security at
a specified, undisplayed price. PL
Orders must be entered with a volume
5 See PCXE Rule 1.1(yy) for the definition of
‘‘User.’’
PO 00000
Frm 00112
Fmt 4703
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of at least 200 shares and will only be
permitted in round lot denominations.
ArcaEx pegging, reserve, and
discretionary functionality will not be
available to modify PL Orders.6 PL
Orders will not route out of ArcaEx to
other market centers and will not
execute against incoming orders sent via
the Intermarket Trading System.
PL Order Execution Priority in ArcaEx
ArcaEx maintains an electronic file of
orders called the Arca book.7 The Arca
book is divided into three components:
the Display Order Process, the Working
Order Process and the Tracking Order
Process.8 Arca ranks and maintains
limit orders in the Arca book according
to price/time priority and generally
affords priority to displayed orders in
the Display Process and prices over
undisplayed orders in the Working
Order Process, sizes and prices.
PL Orders would be executed in the
Working Order Process after all other
orders including reserve orders and the
display portion of discretionary orders
at a particular price level. PL Orders
would, however, take precedence over
undisplayed discretionary order
interest. PL Orders with a price superior
to that of Directed Fills would have
price priority and would execute ahead
of inferior priced Directed Fills in the
Directed Order Process. Also, PL Orders
with a price superior to that of
displayed orders would have price
priority and would execute ahead of
inferior priced displayed orders in the
Display Order Process.
The Exchange believes that the
implementation of the aforementioned
rule changes relating to ArcaEx order
processing would enhance order
execution opportunities on ArcaEx. The
Exchange believes that the proposed
order type would allow for additional
opportunities for liquidity providers to
passively interact with interest in the
Arca book.
2. Statutory Basis
The Exchange believes that the
proposed rule change, as amended, is
consistent with Section 6(b) of the Act,9
in general, and furthers the objectives of
6 More specifically, the pegging functionality will
not be available for PL Orders in that the Passive
Liquidity Order price will not automatically track
the NBBO. See PCXE Rule 7.31(cc). Further, reserve
functionality, meaning undisplayed size, and
discretionary functionality, meaning undisplayed
prices, will not be available for PL Orders since the
Passive Liquidity Order price and size are
undisplayed by definition.
7 See PCXE Rule 1.1(a).
8 The Directed Order Process, as set forth in PCXE
Rule 7.37, precedes the Display, Working, and
Tracking Order Processes, but is not operable at this
time on ArcaEx. ArcaEx intends to implement a
new Directed Process in a future filing.
9 15 U.S.C. 78f(b).
E:\FR\FM\21SEN1.SGM
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Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices
Section 6(b)(1) of the Act,10 in
particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, 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 to and perfect the
mechanisms of a free and open market
and a national market system.
IV. Solicitation of Comments
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.
• 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–2005–53 on the
subject line.
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.
Paper Comments
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The Exchange requested that the
proposed rule change be given
expedited review and accelerated
approval pursuant to Section 19(b)(2) of
the Act. The Exchange believes that the
proposed rule proposal is consistent
with the requirements of Section 6(b)(5)
of the Act and the rules and regulations
thereunder applicable to a national
securities exchange. In particular, the
Exchange believes that its proposal to
implement the PL Order adds
significant value to investors and Users,
will enhance available order interaction
opportunities, and does not raise any
new regulatory issues. Accordingly, the
Exchange believes that its proposal will
facilitate transactions in securities,
remove impediments to and perfect the
mechanism of a free and open market
and a national system, and, in general,
protect investors and the public interest.
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 Exchange consents,
the Commission will:
(A) By order approve such proposed
rule change, as amended, or
(B) Institute proceedings to determine
whether the proposed rule change, as
amended, should be disapproved.
10 15
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
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–9303.
All submissions should refer to File
Number SR-PCX–2005–53. 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, Station Place, 100 F Street, NE.,
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–
2005–53 and should be submitted on or
before October 12, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18762 Filed 9–20–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52425; File No. SR–Phlx–
2005–27]
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto
Relating to the Modification of the
Definition of Firm Customer Quote Size
and the Removal of Certain
Restrictions on Sending Secondary P/
A Orders Under the Linkage Plan
September 14, 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 April 26,
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
have been prepared by the Phlx. On
September 2, 2005, the Exchange
submitted Amendment No. 1 to the
proposed rule change.3 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 Exchange proposes to amend its
rules governing the operation of the
intermarket option linkage to conform
with a proposed amendment 4 to the
Plan for the Purpose of Creating and
Operating an Intermarket Option
Linkage (‘‘Linkage Plan’’).5 The
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b-4.
3 In Amendment No. 1, the Exchange made
clarifying changes to the proposed rule text relating
to the availability of Participant exchanges’
automatic execution system.
4 See Securities Exchange Act Release No. 52401
(September 9, 2005) (File No. 4–429).
5 On July 28, 2000, the Commission approved a
national market system plan for the purpose of
creating and operating an intermarket option market
linkage proposed by the American Stock Exchange,
LLC, Chicago Board Options Exchange,
Incorporated, and International Securities
Exchange, Inc. See Securities Exchange Act Release
No. 43086 (July 28, 2000), 65 FR 48023 (August 4,
1 15
U.S.C. 78f(b)(1).
VerDate Aug<31>2005
14:40 Sep 20, 2005
55443
Continued
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]]>Agencies
[Federal Register Volume 70, Number 182 (Wednesday, September 21, 2005)]
[Notices]
[Pages 55441-55443]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18762]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52436; File No. SR-PCX-2005-53]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment Nos. 1 and 2 Thereto by the Pacific Exchange, Inc.
To Create a New Order Type--Passive Liquidity Orders--for Use in the
ArcaEx Trading Facility of the PCX
September 14, 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 April 15, 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, II, and III below, which
Items have been prepared by the PCX. On June 3, 2005, the PCX filed
Amendment No. 1 to the proposed rule change.\3\ On August 26, 2005, the
PCX filed Amendment No. 2 to the proposed rule change.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1, which replaced the original filing, made
technical and clarifying changes to the proposed rule change.
\4\ Amendment No. 2, which replaced Amendment No. 1, clarified
the execution priority of Passive Liquidity orders in PCXE Rule
7.37, as compared to other orders that are part of the Display Order
Process and the Working Order Processes, and as compared to Directed
Fills in the Display Order Process. In addition, Amendment No. 2
made other technical and clarifying changes to the proposed rule
change.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The PCX, 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 add one new order type, the Passive
Liquidity Order (``PL Order''). The changes described in this rule
proposal would add new Rule 7.31(h)(4) and amend existing Rule 7.37(b).
The text of the proposed rule change, as amended, appears below.
Additions are in italics. Deleted items are in brackets.
* * * * *
[[Page 55442]]
Rule 7
Equities Trading
Rule 7.31(a)-(g)--No Change
(h) Working Order. Any order with a conditional or undisplayed
price and/or size designated as a ``Working Order'' by the Corporation,
including, without limitation:
(1)-(3)--No Change
(4) Passive Liquidity Order. An order to buy or sell a stated
amount of a security at a specified, undisplayed price. Passive
Liquidity Orders will be executed in the Working Order Process after
all other Working Orders except undisplayed discretionary order
interest. Passive Liquidity Orders with a price superior to that of
Directed Fills will have price priority and will execute ahead of
inferior priced Directed Fills in the Directed Order Process. Passive
Liquidity Orders with a price superior to that of displayed orders will
have price priority and will execute ahead of inferior priced displayed
orders in the Display Order Process.
* * * * *
Rule 7.37
(a) Step 1: Directed Order Process. During Core Trading Hours only,
orders may be matched and executed in the Directed Order Process as
follows:
(1) If a User submits a marketable Directed Order to the
Archipelago Exchange and the User's designated Market Maker has a
standing instruction for a Directed Fill to the Archipelago Exchange,
the Directed Order shall be executed against the Directed Fill of the
designated Market Maker, unless there is a Passive Liquidity Order as
defined in PCXE Rule 7.31(h) with a price superior to that of the
Directed Fill, in which case the Passive Liquidity Order will have
price priority and will execute ahead of inferior priced Directed Fills
in the Directed Order Process.
(2)-(4)--No Change.
(b) If an incoming marketable order has not been executed in its
entirety pursuant to paragraph (a) of this Rule, any remaining part of
the order shall be routed to the Display Order Process.
(1) Step 2: Display Order Process.
(A) An incoming marketable order shall first attempt to be matched
for execution against orders in the Display Order Process at the
display price of the resident order for the total amount of stock
available at that price or for the size of the incoming order,
whichever is smaller. Passive Liquidity Orders as defined in PCXE Rule
7.31(h) with a price superior to that of displayed orders will have
price priority and will execute ahead of inferior priced displayed
orders in the Display Order Process. For the purposes of this
subsection, the size of an incoming Reserve Order includes the
displayed and reserve size, and the size of the portion of the Reserve
Order resident in the Display Order Process is equal to its displayed
size. If the incoming marketable order has not been executed in its
entirety, the remaining part of the order shall be routed to the
Working Order Process.
(B)--No Change.
Rule 7.37(b)(2)
(2) Step 3: Working Order Process.
(A) An incoming marketable order shall be matched for execution
against orders in the Working Order Process in the following manner:
(i) An incoming marketable order shall be matched against orders
within the Working Order Process in the order of their ranking, at the
price of the displayed portion (or in the case of an All-or-None Order,
at the limit price or in the case of a Passive Liquidity Order, at its
price), for the total amount of stock available at that price or for
the size of the incoming order, whichever is smaller.
Rule 7.37(b)(2)(A)(ii)-(d)--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 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 Exchange proposes to add a new order type for use
by Users.\5\ The new order type, the PL Order, is an order to buy or
sell a stated amount of a security at a specified, undisplayed price.
---------------------------------------------------------------------------
\5\ See PCXE Rule 1.1(yy) for the definition of ``User.''
---------------------------------------------------------------------------
PL Order Type Features
A PL Order would be an order to buy or sell a stated amount of a
security at a specified, undisplayed price. PL Orders must be entered
with a volume of at least 200 shares and will only be permitted in
round lot denominations. ArcaEx pegging, reserve, and discretionary
functionality will not be available to modify PL Orders.\6\ PL Orders
will not route out of ArcaEx to other market centers and will not
execute against incoming orders sent via the Intermarket Trading
System.
---------------------------------------------------------------------------
\6\ More specifically, the pegging functionality will not be
available for PL Orders in that the Passive Liquidity Order price
will not automatically track the NBBO. See PCXE Rule 7.31(cc).
Further, reserve functionality, meaning undisplayed size, and
discretionary functionality, meaning undisplayed prices, will not be
available for PL Orders since the Passive Liquidity Order price and
size are undisplayed by definition.
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PL Order Execution Priority in ArcaEx
ArcaEx maintains an electronic file of orders called the Arca
book.\7\ The Arca book is divided into three components: the Display
Order Process, the Working Order Process and the Tracking Order
Process.\8\ Arca ranks and maintains limit orders in the Arca book
according to price/time priority and generally affords priority to
displayed orders in the Display Process and prices over undisplayed
orders in the Working Order Process, sizes and prices.
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\7\ See PCXE Rule 1.1(a).
\8\ The Directed Order Process, as set forth in PCXE Rule 7.37,
precedes the Display, Working, and Tracking Order Processes, but is
not operable at this time on ArcaEx. ArcaEx intends to implement a
new Directed Process in a future filing.
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PL Orders would be executed in the Working Order Process after all
other orders including reserve orders and the display portion of
discretionary orders at a particular price level. PL Orders would,
however, take precedence over undisplayed discretionary order interest.
PL Orders with a price superior to that of Directed Fills would have
price priority and would execute ahead of inferior priced Directed
Fills in the Directed Order Process. Also, PL Orders with a price
superior to that of displayed orders would have price priority and
would execute ahead of inferior priced displayed orders in the Display
Order Process.
The Exchange believes that the implementation of the aforementioned
rule changes relating to ArcaEx order processing would enhance order
execution opportunities on ArcaEx. The Exchange believes that the
proposed order type would allow for additional opportunities for
liquidity providers to passively interact with interest in the Arca
book.
2. Statutory Basis
The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act,\9\ in general, and furthers
the objectives of
[[Page 55443]]
Section 6(b)(1) of the Act,\10\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, 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 to and perfect the mechanisms of
a free and open market and a national market system.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(1).
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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 Exchange requested that the proposed rule change be given
expedited review and accelerated approval pursuant to Section 19(b)(2)
of the Act. The Exchange believes that the proposed rule proposal is
consistent with the requirements of Section 6(b)(5) of the Act and the
rules and regulations thereunder applicable to a national securities
exchange. In particular, the Exchange believes that its proposal to
implement the PL Order adds significant value to investors and Users,
will enhance available order interaction opportunities, and does not
raise any new regulatory issues. Accordingly, the Exchange believes
that its proposal will facilitate transactions in securities, remove
impediments to and perfect the mechanism of a free and open market and
a national system, and, in general, protect investors and the public
interest.
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 Exchange consents, the Commission will:
(A) By order approve such proposed rule change, as amended, or
(B) Institute proceedings to determine whether the proposed rule
change, as amended, 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-2005-53 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-PCX-2005-53. 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, Station
Place, 100 F Street, NE., 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-
2005-53 and should be submitted on or before October 12, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18762 Filed 9-20-05; 8:45 am]
BILLING CODE 8010-01-P
