Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Certificate of Incorporation of PCX Holdings, Inc., 6530-6535 [E6-1730]
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Federal Register / Vol. 71, No. 26 / Wednesday, February 8, 2006 / Notices
when applying original listing and
annual issuer fees.
In addition, the annual fees for issues
listed pursuant to Sections 106
(currency and index warrants) and 107
(other securities) of the Amex Company
Guide will remain at their current rates.
Finally, the Exchange is also
proposing other minor technical
changes to Sections 140 and 141 of the
Amex Company Guide, which will not
further alter the fees but will clarify the
text of these Sections.
2. Statutory Basis
Amex believes that the proposed rule
change is consistent with Section 6(b) of
the Act 7 in general and furthers the
objectives of Section 6(b)(4) of the Act 8
in particular in that it is designed to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities. In
addition, increasing original listing and
annual fees will provide the Exchange
with the ability to cover increased
expenses related to enhancements in its
trading technology, business services,
and regulatory programs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Amex does not believe that the
proposed rule change will impose any
burden on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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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, 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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
Self-Regulatory Organizations; Pacific
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to the Certificate
of Incorporation of PCX Holdings, Inc.
• 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
No. SR–Amex–2005–124 on the subject
line.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.9
Nancy M. Morris,
Secretary.
[FR Doc. E6–1728 Filed 2–7–06; 8:45 am]
7 15
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January 31, 2006.
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 January
Paper Comments
27, 2006, the Pacific Exchange, Inc.
(‘‘PCX’’ or ‘‘Exchange’’) filed with the
• Send paper comments in triplicate
Securities and Exchange Commission
to Nancy M. Morris, Secretary,
(‘‘Commission’’) the proposed rule
Securities and Exchange Commission,
change as described in Items I and II
Station Place, 100 F Street, NE,
below, which Items have been prepared
Washington, DC 20549–1090.
by PCX. PCX filed the proposed rule
All submissions should refer to File
change pursuant to Section 19(b)(3)(A)
Number SR–Amex–2005–124. This file
of the Act,3 and Rule 19b–4(f)(6)
number should be included on the
thereunder,4 which renders the proposal
subject line if e-mail is used. To help the effective upon filing with the
Commission process and review your
Commission. The Commission is
comments more efficiently, please use
publishing this notice to solicit
only one method. The Commission will comments on the proposed rule change
post all comments on the Commission’s from interested persons.
Internet Web site (https://www.sec.gov/
I. Self-Regulatory Organization’s
rules/sro.shtml). Copies of the
Statement of the Terms of Substance of
submission, all subsequent
the Proposed Rule Change
amendments, all written statements
PCX proposes to submit to the
with respect to the proposed rule
Commission a proposed rule change to
change that are filed with the
further extend certain temporary
Commission, and all written
exceptions from the voting and
communications relating to the
ownership limitations in the certificate
proposed rule change between the
Commission and any person, other than of incorporation of PCX Holdings, Inc.
(‘‘PCXH’’), a Delaware corporation and a
those that may be withheld from the
parent company of PCX, originally
public in accordance with the
approved by the Commission in an
provisions of 5 U.S.C. 552, will be
order issued on September 22, 2005 (the
available for inspection and copying in
‘‘SEC Order’’) 5 and extended pursuant
the Commission’s Public Reference
Room. Copies of such filing also will be to a proposed rule change filed with the
Commission on December 19, 2005 (the
available for inspection and copying at
‘‘Original Extension Rule Filing’’) 6 and
the principal office of Amex. All
amended on December 23, 2005,7 so as
comments received will be posted
to allow: (a) Archipelago Holdings, Inc.
without change; the Commission does
(‘‘Archipelago’’), a Delaware corporation
not edit personal identifying
and the ultimate parent company of
information from submissions. You
PCXH and PCX, to continue to (i) own
should submit only information that
you wish to make available publicly. All Wave Securities, L.L.C. (‘‘Wave’’) and
(ii) own and operate the ATS Inbound
submissions should refer to File
Router Function (as defined below) of
Number SR–Amex–2005–124 and
should be submitted on or before March
1 15 U.S.C. 78s(b)(1).
1, 2006.
2
BILLING CODE 8010–01–P
U.S.C. 78f(b).
8 15 U.S.C. 78f(b)(4).
[Release No. 34–53202; File No. SR–PCX–
2006–04]
PO 00000
CFR 200.30–3(a)(12).
Frm 00086
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17 CFR 240.19b–4.
U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 See Securities Exchange Act Release No. 52497
(September 22, 2005), 70 FR 56949 (September 29,
2005) (SR–PCX–2005–90) (the ‘‘SEC Order’’).
6 See Pacific Exchange, Inc., Proposed Rule
Change Relating to the Certificate of Incorporation
of PCX Holdings, Inc., File No. SR–PCX–2005–139
(December 19, 2005).
7 See Amendment No. 1 to the Original Extension
Rule Filing (December 23, 2005).
3 15
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Federal Register / Vol. 71, No. 26 / Wednesday, February 8, 2006 / Notices
Archipelago Trading Services, Inc.
(‘‘ATS’’) and the Inbound Router
Clearing Function (as defined below) of
Archipelago Securities, L.L.C.
(‘‘Archipelago Securities’’); and (b)
Gerald D. Putnam, Chairman and Chief
Executive Officer of Archipelago (‘‘Mr.
Putnam’’), to own in excess of 5% of
Terra Nova Trading, L.L.C. (‘‘TNT’’) and
continue to serve as a director of TAL
Financial Services (‘‘TAL’’), in each case
until the earlier of (x) the closing date
of the merger of Archipelago and the
New York Stock Exchange, Inc. (the
‘‘Archipelago NYSE Merger’’) and (y)
March 31, 2006.
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
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1. Purpose
a. PCXH Acquisition and the
Amendment of the PCXH Certificate of
Incorporation. Archipelago operates the
Archipelago Exchange (‘‘ArcaEx’’), an
open, all-electronic stock market for the
trading of equity securities. On
September 26, 2005, Archipelago
completed its acquisition of PCXH and
all of its wholly-owned subsidiaries,
including PCX and PCXE (the ‘‘PCXH
Acquisition’’). The PCXH Acquisition
was accomplished by way of a merger
of PCXH with a wholly-owned
subsidiary of Archipelago, with PCXH
being the surviving corporation in the
merger and becoming a wholly-owned
subsidiary of Archipelago.
The certificate of incorporation of
PCXH (as amended to date, the ‘‘PCXH
Certificate of Incorporation’’) contains
various ownership and voting
restrictions on PCXH’s capital stock,
which are designed to safeguard the
independence of the self-regulatory
functions of PCX and to protect the
Commission’s oversight responsibilities.
In order to allow Archipelago to own
100% of the capital stock of PCXH, prior
to the completion of the PCXH
Acquisition, PCX filed with the
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Commission a proposed rule change
which sought to, among other things,
amend the PCXH Certificate of
Incorporation to create an exception
from the voting and ownership
restrictions for Archipelago and certain
of its related persons (the ‘‘Original Rule
Filing’’).8 The Original Rule Filing, as
amended by Amendment No. 1 and
Amendment No. 2 thereto, was
approved by the Commission on
September 22, 2005 9 and the amended
PCXH Certificate of Incorporation
became effective on September 26, 2005,
upon the closing of the PCXH
Acquisition.
Article Nine of the PCXH Certificate
of Incorporation provides that no
Person,10 either alone or together with
its Related Persons,11 may own, directly
or indirectly, shares constituting more
than 40% of the outstanding shares of
any class of PCXH capital stock,12 and
that no Person, either alone or together
with its Related Persons who is a
trading permit holder of PCX or an
equities trading permit holder of PCXE,
8 See Pacific Exchange, Inc., Proposed Rule
Change Relating to the Certificate of Incorporation
of PCX Holdings, Inc., PCX Rules, and Bylaws of
Archipelago Holdings, Inc., File No. SR–PCX–2005–
90 (August 1, 2005).
9 See SEC Order.
10 ‘‘Person’’ is defined to mean an individual,
partnership (general or limited), joint stock
company, corporation, limited liability company,
trust or unincorporated organization, or any
governmental entity or agency or political
subdivision thereof. PCXH Certificate of
Incorporation, Article Nine, Section 1(b)(iv).
11 The term ‘‘Related Person,’’ as defined in the
PCXH Certificate of Incorporation, means (i) with
respect to any person, all ‘‘affiliates’’ and
‘‘associates’’ of such person (as such terms are
defined in Rule 12b–2 under the Act); (ii) with
respect to any person constituting a trading permit
holder of PCX or an equities trading permit holder
of PCXE, any broker dealer with which such holder
is associated; and (iii) any two or more persons that
have any agreement, arrangement or understanding
(whether or not in writing) to act together for the
purpose of acquiring, voting, holding or disposing
of shares of the capital stock of PCXH. PCXH
Certificate of Incorporation, Article Nine, Section
1(b)(iv).
12 PCXH Certificate of Incorporation, Article
Nine, Section 1(b)(i). However, such restriction may
be waived by the Board of Directors of PCXH
pursuant to an amendment to the Bylaws of PCXH
adopted by the Board of Directors, if, in connection
with the adoption of such amendment, the Board
of Directors adopts a resolution stating that it is the
determination of such Board that such amendment
will not impair the ability of PCX to carry out its
functions and responsibilities as an ‘‘exchange’’
under the Act and is otherwise in the best interests
of PCXH and its stockholders and PCX, and will not
impair the ability of the Commission to enforce said
Act, and such amendment shall not be effective
until approved by said Commission; provided that
the Board of Directors of PCXH shall have
determined that such Person and its Related
Persons are not subject to any applicable ‘‘statutory
disqualification’’ (within the meaning of Section
3(a)(39) of the Act). PCXH Certificate of
Incorporation, Article Nine, Sections 1(b)(i)(B) and
1(b)(i)(C).
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may own, directly or indirectly, shares
constituting more than 20% of any class
of PCXH capital stock.13 Furthermore,
the PCXH Certificate of Incorporation
provides that, for so long as PCXH
controls, directly or indirectly, PCX, no
Person, either alone or with its Related
Persons, may directly or indirectly vote
or cause the voting of shares of PCXH
capital stock or give any proxy or
consent with respect to shares
representing more than 20% of the
voting power of the issued and
outstanding PCXH capital stock.14 The
PCXH Certificate of Incorporation also
places limitations on the right of any
Person, either alone or with its Related
Persons, to enter into any agreement
with respect to the withholding of any
vote or proxy.15
PCX proposed and the Commission
approved an exception from the
ownership and voting limitations
described above to add a new paragraph
at the end of Article Nine of the PCXH
Certificate of Incorporation, which
provides that for so long as Archipelago
directly owns all of the outstanding
capital stock of PCXH, these ownership
and voting limitations shall not be
applicable to the ownership and voting
of shares of PCXH by (i) Archipelago,
(ii) any Person which is a Related
Person of Archipelago, either alone or
together with its Related Persons, and
(iii) any other Person to which
Archipelago is a Related Person, either
alone or together with its Related
Persons.16 These exceptions to the
ownership and voting limitations,
however, shall not apply to any
‘‘Prohibited Persons,’’ 17 which is
defined to mean any Person that is, or
that has a Related Person that is (i) an
OTP Holder or an OTP Firm (as defined
in the rules of PCX) 18 or (ii) an ETP
Holder (as defined in the rules of
PCXE),19 unless such Person is also a
13 Id.,
14 Id.,
Article Nine, Section 1(b)(ii).
Article Nine, Section 1(c).
15 Id.
16 Id.,
Article Nine, Section 4.
17 Id.
18 PCX rules define an ‘‘OTP Holder’’ to mean any
natural person, in good standing, who has been
issued an Options Trading Permit (‘‘OTP’’) by the
Exchange for effecting approved securities
transactions on the Exchange’s trading facilities, or
has been named as a Nominee. PCX Rule 1.1(q). The
term ‘‘Nominee’’ means an individual who is
authorized by an ‘‘OTP Firm’’ (a sole
proprietorship, partnership, corporation, limited
liability company or other organization in good
standing who holds an OTP or upon whom an
individual OTP Holder has conferred trading
privileges on the Exchange’s trading facilities) to
conduct business on the Exchange’s trading
facilities and to represent such OTP Firm in all
matters relating to the Exchange. PCX Rule 1.1(n).
19 PCXE rules define an ‘‘ETP Holder’’ to mean
any sole proprietorship, partnership, corporation,
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‘‘Permitted Person’’ under the PCXH
Certificate of Incorporation.20 The
PCXH Certificate of Incorporation
further provides that any Prohibited
Person not covered by the definition of
a Permitted Person who is subject to and
exceeds the voting and ownership
limitations imposed by Article Nine as
of the date of the closing of the PCXH
Acquisition shall be permitted to exceed
the voting and ownership limitations
imposed by Article Nine only to the
extent and for the time period approved
by the Commission.21
b. Wave. Wave is an introducing
broker for Archipelago’s institutional
customers and provides such customers
with access to ArcaEx and other market
centers. Because Wave, a broker-dealer
and an ETP Holder of PCXE, is a
wholly-owned subsidiary and,
consequently, a Related Person, of
Archipelago, it falls within the
definition of ‘‘Prohibited Persons’’
under the PCXH Certificate of
Incorporation. Consequently, absent an
exception, Archipelago’s ownership of
PCXH would cause Wave, as an ETP
Holder, to exceed the voting and
ownership limitations imposed by
Article Nine of the PCXH Certificate of
Incorporation. Therefore, in connection
with the PCXH Acquisition, PCX
requested a temporary exception from
the ownership and voting limitations in
the PCX Certificate of Incorporation for
Archipelago’s ownership of Wave until
December 31, 2005, subject to the
condition that during that interim
period Archipelago would continue to
maintain and comply with its current
information barriers between Wave, on
the one hand, and PCX, PCXE and other
subsidiaries of Archipelago that are
facilities of PCX or PCXE, on the other
hand.22
The Commission approved PCX’s rule
proposal regarding Wave (the ‘‘Original
limited liability company or other organization in
good standing that has been issued an Equity
Trading Permit, a permit issued by the PCXE for
effecting approved securities transactions on the
trading facilities of PCXE. PCXE Rule 1.1(n).
20 ‘‘Permitted Person’’ is defined to mean (A) any
broker or dealer approved by the Commission after
June 20, 2005 to be a facility (as defined in Section
3(a)(2) of the Act) of PCX; (B) any Person that has
been approved by the Commission prior to it
becoming subject to the provisions of Article Nine
of the PCXH Certificate of Incorporation with
respect to the voting and ownership of shares of
PCXH capital stock by such Person; and (C) any
Person that is a Related Person of Archipelago
solely by reason of beneficially owning, either alone
or together with its Related Persons, less than 20%
of the outstanding shares of Archipelago capital
stock. PCXH Certificate of Incorporation, Article
Nine, Section 4.
21 Id.
22 See Original Rule Filing at 36–37 and
Amendment No. 2 to the Original Rule Filing
(September 16, 2005) (‘‘Amendment No. 2’’), at 4.
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Wave Exception’’).23 In the SEC Order,
the Commission stated that the
affiliation of an exchange with one of its
members that provides inbound access
to the exchange—in direct competition
with other members of the exchange—
raises potential conflicts of interest
between the exchange’s regulatory
responsibilities and its commercial
interests, and the potential for unfair
competitive advantage that the affiliated
member could have by virtue of
informational or operational advantages,
or the ability to receive preferential
treatment.24 However, noting that the
conditions to be imposed during the
interim period were designed to
mitigate potential conflicts of interest
and the potential for unfair competitive
advantage, the Commission concluded
that it would be appropriate and
consistent with the Act to allow a
limited, temporary exception for
Archipelago to continue its ownership
of Wave.25 In granting the approval for
the Original Wave Exception, the
Commission also noted that in addition
to being a member of PCX, Wave is a
member of the National Association of
Securities Dealers, Inc. (‘‘NASD’’), a
self-regulatory organization (‘‘SRO’’) not
affiliated with Archipelago, and the
NASD has been designated by the
Commission as the ‘‘Designated
Examining Authority’’ for Wave
pursuant to Rule 17d–1 of the Act.26
Furthermore, during the interim period,
Wave would continue to be covered by
the scope of an agreement between
NASD and PCX, which was entered into
pursuant to Rule 17d–2 under the Act 27
23 See
24 Id.
SEC Order at 56960.
at 56959.
25 Id.
26 Id. Pursuant to Rule 17d–1 under the Act,
where a member of the Securities Investor
Protection Corporation is a member of more than
one SRO, the Commission shall designate to one of
such organizations the responsibility of examining
such member for compliance with the applicable
financial responsibility rules. In making such
designation, the Commission shall take into
consideration the regulatory capabilities and
procedures of the SROs, availability of staff,
convenience of location, unnecessary regulatory
duplication, and such other factors as the
Commission may consider germane to the
protection of investors, the cooperation and
coordination among SROs, and the development of
a national market system for the clearance and
settlement of securities transactions. 17 CFR
240.17d–1.
27 Rule 17d–2 under the Act provides that any
two or more SROs may file with the Commission
a plan for allocating among such SROs the
responsibilities to receive regulatory reports from
persons who are members or participants of more
than one of such SROs to examine such persons for
compliance, or to enforce compliance by such
persons, with specified provisions of the Act, the
rules and regulations thereunder, and the rules of
such SROs, or to carry out other specified
regulatory functions with respect to such persons.
17 CFR 240.17d–2.
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(the ‘‘17d–2 Agreement’’) and provides
for a plan concerning the regulatory
responsibilities of NASD with respect to
certain members of PCX, including
Wave.28
In accordance with the terms of the
Original Wave Exception, Archipelago
has been working to sell its ownership
interests in Wave. On December 19,
2005, the Exchange submitted the
Original Extension Rule Filing
requesting an extension of the Original
Wave Exception to January 31, 2006,
subject to the same conditions as
applied to the Original Wave Exception
described above.29 The extension took
effect immediately upon the filing of the
Original Extension Rule Filing (the
‘‘Original Wave Extension’’). On January
19, 2006, Archipelago entered into a
definitive agreement for the sale of
Wave. The definitive agreement
conditions the sale on the satisfaction of
a number of closing conditions,
including the receipt of certain
regulatory approvals, and Archipelago
intends to complete the sale as soon as
possible following the satisfaction of
these conditions.
c. ATS Inbound Router Function and
the Inbound Router Clearing Function.
Archipelago currently owns ATS, a
wholly owned subsidiary that is a
broker-dealer and an ETP Holder of
PCXE. The business of ATS consists of,
among other things, acting as an
introducing broker for non-ETP Holder
broker or dealer clients for securities
traded on ArcaEx (the ‘‘ATS Inbound
Router Function’’). Archipelago
Securities, a wholly-owned subsidiary
of Archipelago, is a registered brokerdealer, a member of the NASD and an
ETP Holder. In addition to its other
functions, Archipelago Securities
provides clearing functions for trades
executed by the ATS Inbound Router
Function (the ‘‘Inbound Router Clearing
Function’’).
Because ATS, a broker-dealer and an
ETP Holder of PCXE, is a wholly-owned
subsidiary and, consequently, a Related
Person, of Archipelago, it falls within
the definition of ‘‘Prohibited Persons’’
under the PCXH Certificate of
Incorporation. Consequently, absent an
exception, Archipelago’s ownership of
PCXH would cause ATS to exceed the
voting and ownership limitations
imposed by Article Nine of the PCXH
Certificate of Incorporation. Likewise,
because Archipelago Securities, a
broker-dealer and an ETP Holder of
PCXE, is a wholly owned subsidiary
and, consequently, a Related Person, of
Archipelago, and the approvals of
28 See
29 The
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Original Extension Rule Filing at 13–14.
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Archipelago Securities set forth
elsewhere in the SEC Order were
limited in scope and did not include its
Inbound Router Clearing Function, it
falls within the definition of ‘‘Prohibited
Persons’’ under the PCXH Certificate of
Incorporation. Consequently, absent an
exception, Archipelago’s ownership of
PCXH would cause Archipelago
Securities to exceed the voting and
ownership limitations imposed by
Article Nine of the PCXH Certificate of
Incorporation.
Therefore, in connection with the
PCXH Acquisition, PCX requested a
temporary exception from the
ownership and voting limitations in the
PCX Certificate of Incorporation for
Archipelago’s ownership and operation
of the ATS Inbound Router Function
and the Inbound Router Clearing
Function until the earlier of (i) the
closing date of the Archipelago NYSE
Merger and (ii) March 31, 2006, subject
to the following conditions: (1) The
revenues derived by Archipelago from
the ATS Inbound Router Function will
not exceed 7% of the consolidated
revenues of Archipelago (determined on
a quarterly basis); (2) the ATS Inbound
Router Function will not accept any
new clients following the closing of
Archipelago’s acquisition of PCXH; and
(3) Archipelago will continue to
maintain and comply with its current
information barrier between the ATS
Inbound Router Function on the one
hand and PCX, PCXE and the other
subsidiaries of Archipelago that are
facilities of PCX or PCXE on the other
hand.30 The Commission approved
PCX’s rule proposal regarding the ATS
Inbound Router Function and the
Inbound Router Clearing Function (the
‘‘Original Inbound Router
Exception’’).31 In the SEC Order, the
Commission stated that the affiliation of
an exchange with one of its members
that provides inbound access to the
exchange—in direct competition with
other members of the exchange—raises
potential conflicts of interest between
the exchange’s regulatory
responsibilities and its commercial
interests, and the potential for unfair
competitive advantage that the affiliated
member could have by virtue of
informational or operational advantages,
or the ability to receive preferential
treatment.32 However, noting that the
conditions to be imposed during the
interim period were designed to
mitigate potential conflicts of interest
and the potential for unfair competitive
advantage, the Commission concluded
30 See
Amendment No. 2 at 5–6.
SEC Order at 56960.
32 Id. at 56959.
31 See
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that it would be appropriate and
consistent with the Act to allow a
limited, temporary exception for
Archipelago to continue its ownership
of the ATS Inbound Router Function
and the Inbound Router Clearing
Function.33 In granting the approval for
the Original Inbound Router Exception,
the Commission also noted that in
addition to being a member of PCX, ATS
is a member of the NASD and the NASD
has been designated by the Commission
as the ‘‘Designated Examining
Authority’’ for ATS pursuant to Rule
17d–1 of the Act.34 Furthermore, during
the interim period, ATS would continue
to be covered by the scope of the 17d–
2 Agreement,35 which provides for a
plan concerning the regulatory
responsibilities of NASD with respect to
certain members of PCX, including
ATS.36
In accordance with the terms of the
Original Inbound Router Exception,
Archipelago has been working to sell its
ownership interest in the ATS Inbound
Router Function. Given the uncertainty
of the closing date of the Archipelago
NYSE Merger, in the Original Extension
Rule Filing, as amended by Amendment
No. 1 thereto, the Exchange requested
an extension of the Original Inbound
Router Exception to January 31, 2006,
subject to the same conditions as
applied to the Original Inbound Router
Exception described above.37 The
extension took effect immediately upon
the filing of Amendment No. 1 to the
Original Extension Rule Filing (the
‘‘Original Inbound Router Extension’’).
On December 23, 2005, Archipelago
entered into a definitive agreement for
the sale of the ATS Inbound Router
Function to Order Execution Services
Holdings, Inc. (‘‘OES’’).38 The definitive
agreement conditions the sale on the
satisfaction of a number of closing
conditions, including the receipt of
NASD and other regulatory approvals,
and Archipelago intends to complete
the sale as soon as possible following
the satisfaction of these conditions.
d. TNT. TNT is a wholly owned
subsidiary of TAL. Mr. Putnam
indirectly owns in excess of 5% of TNT
and serves as a director of TAL.39
33 Id.
34 Id. See supra note 26 for a description of Rule
17d–1 under the Act.
35 See supra note 27.
36 See SEC Order at 56959.
37 Original Extension Rule Filing at 13–14, and
Amendment No. 1 to the Original Extension Rule
Filing at 6.
38 OES is neither a Related Person of Archipelago
nor a ‘‘Prohibited Person’’ under the PCXH
Certificate of Incorporation.
39 PCX clarified that Mr. Putnam’s ownership in
TNT is indirect. Telephone conversation between
Kevin J.P. O’Hara, General Counsel, PCX and
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
6533
Because TNT, a broker-dealer and an
ETP Holder of PCXE, is a Related Person
of Archipelago by virtue of Mr.
Putnam’s ownership of in excess of 5%
of TNT and service as a director of TAL,
it falls within the definition of
‘‘Prohibited Persons’’ under the PCXH
Certificate of Incorporation.
Consequently, absent an exception,
Archipelago’s ownership of PCXH
would cause TNT to exceed the voting
and ownership limitations imposed by
Article Nine of the PCXH Certificate of
Incorporation. Therefore, in connection
with the PCXH Acquisition, the
Commission approved the Exchange’s
request for a temporary exception for
Mr. Putnam to continue to own in
excess of 5% of TNT and continue to
serve as a director of TAL until
December 31, 2005 (the ‘‘Original TNT
Exception’’).40 In the SEC Order, the
Commission stated that it believes that
such a temporary exception is
appropriate and consistent with the Act
because it will eliminate the affiliation
between TNT and Archipelago but
allow Mr. Putnam a reasonable amount
of time to effectuate such actions
necessary to eliminate the affiliation.41
Mr. Putnam has been working to
eliminate the affiliation with TNT. In
light of the fact that the sale of Mr.
Putnam’s interest in TNT was unlikely
to be consummated by December 31,
2005, in the Original Extension Rule
Filing, as amended by Amendment No.
1 thereto, the Exchange also requested
an extension of the Original TNT
Exception to January 31, 2006.42 The
extension took effect immediately upon
the filing of Amendment No. 1 to the
Original Extension Rule Filing (the
‘‘Original TNT Extension’’).
e. Further Extensions of the
Temporary Exceptions.
i. Wave. On January 19, 2006,
Archipelago entered into a definitive
agreement for the sale of Wave.43 The
definitive agreement conditions the sale
on the satisfaction of a number of
closing conditions, including the receipt
of certain regulatory approvals, and
Archipelago intends to complete the
sale as soon as possible following the
satisfaction of these conditions. The
Original Wave Extension expires on
January 31, 2006. In light of the fact that
Jennifer Dodd, Special Counsel, Division of Market
Regulation, Commission, on January 30, 2006
(‘‘Telephone Conversation’’).
40 See SEC Order at 56960.
41 Id.
42 Original Extension Rule Filing at 14, and
Amendment No.1 to the Original Extension Rule
Filing at 6.
43 The purchaser of Wave is neither a Related
Person of Archipelago nor a ‘‘Prohibited Person’’
under the PCXH Certificate of Incorporation.
E:\FR\FM\08FEN1.SGM
08FEN1
6534
Federal Register / Vol. 71, No. 26 / Wednesday, February 8, 2006 / Notices
rmajette on PROD1PC67 with NOTICES1
the sale is unlikely to be consummated
by January 31, 2006, the Exchange
hereby proposes to further extend the
Original Wave Exception to the earlier
of (x) the closing date of the Archipelago
NYSE Merger and (y) March 31, 2006,
subject to the same conditions as
applied to the Original Wave Exception
described above. In requesting such
extension, Archipelago and the
Exchange note that the NASD is the
‘‘Designated Examining Authority’’ for
Wave pursuant to Rule 17d–1 of the Act.
Furthermore, during the interim period,
Wave would continue to be covered by
the scope of the 17d–2 Agreement,
which provides for a plan concerning
the regulatory responsibilities of NASD
with respect to certain members of PCX,
including Wave. Archipelago and the
Exchange believe that this extension
would be in keeping with the policy
justifications for the Original Wave
Exception and the Original Wave
Extension outlined above, while
allowing Archipelago to complete the
sale of Wave.
ii. ATS Inbound Router Function and
the Inbound Router Clearing Function.
On December 23, 2005, Archipelago
entered into a definitive agreement for
the sale of the ATS Inbound Router
Function to OES.44 The definitive
agreement conditions the sale on the
satisfaction of a number of closing
conditions, including the receipt of
NASD and other regulatory approvals,
and Archipelago intends to complete
the sale as soon as possible following
the satisfaction of these conditions. The
Original Inbound Router Extension
expires on January 31, 2006. Because of
the uncertainties associated with the
timing of the regulatory approvals, it is
unclear whether Archipelago would be
able to complete the sale by January 31,
2006. Therefore, the Exchange hereby
proposes to further extend the Original
Inbound Router Exception to the earlier
of (x) the closing date of the Archipelago
NYSE Merger and (y) March 31, 2006,
subject to the same conditions as
applied to the Original Wave Exception
described above. In requesting such
extension, Archipelago and the
Exchange note that the NASD is the
‘‘Designated Examining Authority’’ for
ATS pursuant to Rule 17d–1 of the Act.
Furthermore, during the interim period,
ATS would continue to be covered by
the scope of the 17d–2 Agreement,
which provides for a plan concerning
44 PCX clarified that the Inbound Router Clearing
Function will be discontinued after the sale of the
ATS Inbound Router Function subject only to the
provision of transition services by Archipelago
Securities to OES, and that PCX intends to file a
proposed rule change requesting approval of such
services. Telephone Conversation.
VerDate Aug<31>2005
15:26 Feb 07, 2006
Jkt 208001
the regulatory responsibilities of NASD
with respect to certain members of PCX,
including ATS. Archipelago and the
Exchange believe that this extension
would be in keeping with the policy
justifications for the Original Inbound
Router Exception and the Original
Inbound Router Extension outlined
above, while allowing Archipelago to
complete the sale of the ATS Inbound
Router Function.
iii. TNT. Mr. Putnam has been
working to eliminate the affiliation with
TNT. Once he has reduced his interest
in TNT, Mr. Putnam would also cease
serving as a director of TAL.45 The
Original TNT Extension expires on
January 31, 2006. In light of the fact that
the sale of Mr. Putnam’s interest in TNT
is unlikely to be consummated by
January 31, 2006, the Exchange hereby
proposes to extend the Original TNT
Exception to the earlier of (x) the closing
date of the Archipelago NYSE Merger
and (y) March 31, 2006. In requesting
such extension, Archipelago and the
Exchange note that the NASD is the
‘‘Designated Examining Authority’’ for
TNT pursuant to Rule 17d–1 of the Act.
Furthermore, during the interim period,
TNT would continue to be covered by
the scope of the 17d–2 Agreement,
which provides for a plan concerning
the regulatory responsibilities of NASD
with respect to certain members of PCX,
including TNT. Archipelago and the
Exchange believe that this extension
would be in keeping with the policy
justifications for the Original TNT
Exception and the Original TNT
Extension outlined above, while
allowing Mr. Putnam a reasonable
amount of time to effectuate the actions
necessary to eliminate the affiliation
between TNT and Archipelago.
2. Statutory Basis
The Exchange believes that the
proposed rule change in this filing is
consistent with Section 6(b) 46 of the
Act, in general, and furthers the
objectives of Section 6(b)(1),47 in
particular, in that it enables the
Exchange to be so organized so as to
have the capacity to be able to carry out
the purposes of the Act and to comply,
and (subject to any rule or order of the
Commission pursuant to Section 17(d)
or 19(g)(2) of the Act) to enforce
compliance by its exchange members
and persons associated with its
exchange members, with the provisions
of the Act, the rules and regulations
thereunder, and the rules of the
Exchange. The Exchange also believes
that this filing furthers the objectives of
Section 6(b)(5),48 in particular, because
the rules summarized herein would
create a governance and regulatory
structure with respect to the operation
of the equities and options business of
PCX that is designed to help 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; and 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.
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
Because the foregoing proposed rule
change does not: (1) Significantly affect
the protection of investors or the public
interest; (2) impose any significant
burden on competition; and (3) 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) 49 of the Act and Rule 19b–
4(f)(6) thereunder.50 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.
48 15
45 PCX
clarified that Mr. Putnam would cease
serving as a director of TAL once he has reduced
his interest in TNT. Telephone Conversation.
46 15 U.S.C. 78f(b).
47 15 U.S.C. 78f(b)(1).
PO 00000
Frm 00090
Fmt 4703
Sfmt 4703
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(3)(A).
50 17 CFR 240.19b–4(f)(6). The Exchange
provided the Commission with written notice of its
intent to file this proposed rule change on January
23, 2006.
49 15
E:\FR\FM\08FEN1.SGM
08FEN1
Federal Register / Vol. 71, No. 26 / Wednesday, February 8, 2006 / Notices
PCX has asked the Commission to
waive the 30-day operative delay. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest. Because the Original
Wave Extension, the Original Inbound
Router Extension and the Original TNT
Extension each expire on January 31,
2006, such waiver will allow each of
Wave, ATS (with respect to the ATS
Inbound Router Function), Archipelago
Securities (with respect to the Inbound
Router Clearing Function), and TNT to
remain in compliance with the voting
and ownership limitations in the PCXH
Certificate of Incorporation. The
Commission notes that the Exchange
has represented that Archipelago
entered into definitive agreements for
the sale of Wave on January 19, 2006
and for the sale of the ATS Inbound
Router Function on December 23, 2005.
The time period for each of the
extensions is short and will terminate
on the earlier of (1) the closing date of
the Archipelago NYSE Merger and (2)
March 31, 2006. In addition, the
Commission notes that the following
protections are and will continue to be
in place during the interim period: (i)
Wave, ATS, and TNT are members of
the NASD as well as PCX, (ii) the NASD
is the Designated Examining Authority
for Wave, ATS, and TNT pursuant to
Rule 17d–1 of the Act, and (iii) Wave,
ATS, and TNT are, and will continue to
be during the extension, covered by the
scope of the 17d–2 Agreement. Further,
Archipelago’s ownership and operation
of Wave, the ATS Inbound Router
Function of ATS, and the Inbound
Router Clearing Function of Archipelago
Securities will continue to be subject to
the same conditions as the Original
Wave Exception and the Original
Inbound Router Exception, as described
above and as approved by the
Commission in the SEC Order.
For these reasons, the Commission
designates the proposal to be effective
and operative upon filing with the
Commission.51
rmajette on PROD1PC67 with NOTICES1
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:
51 For purposes only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
VerDate Aug<31>2005
15:26 Feb 07, 2006
Jkt 208001
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–2006–04 on the
subject line.
6535
collection packages that will require
clearance by the Office of Management
and Budget (OMB) in compliance with
Pub. L. 104–13, the Paperwork
Reduction Act of 1995, effective October
1, 1995. The information collection
package included in this notice is for
approval of an existing OMB-approved
information collection.
Paper Comments
SSA is soliciting comments on the
accuracy of the agency’s burden
• Send paper comments in triplicate
estimate; the need for the information;
to Nancy M. Morris, Secretary,
its practical utility; ways to enhance its
Securities and Exchange Commission,
quality, utility, and clarity; and on ways
100 F Street, NE., Washington, DC
to minimize burden on respondents,
20549–1090.
including the use of automated
All submissions should refer to File
collection techniques or other forms of
Number SR–PCX–2006–04. This file
information technology. Written
number should be included on the
subject line if e-mail is used. To help the comments and recommendations
regarding the information collection(s)
Commission process and review your
should be submitted to the OMB Desk
comments more efficiently, please use
only one method. The Commission will Officer and the SSA Reports Clearance
post all comments on the Commission’s Officer. The information can be mailed
and/or faxed to the individuals at the
Internet Web site (https://www.sec.gov/
addresses and fax numbers listed below:
rules/sro.shtml). Copies of the
(OMB), Office of Management and
submission, all subsequent
Budget, Attn: Desk Officer for SSA, Fax:
amendments, all written statements
202–395–6974.
with respect to the proposed rule
(SSA), Social Security
change that are filed with the
Administration, DCFAM, Attn: Reports
Commission, and all written
Clearance Officer, 1333 Annex Building,
communications relating to the
6401 Security Blvd., Baltimore, MD
proposed rule change between the
Commission and any person, other than 21235. Fax: 410–965–6400. E-mail:
OPLM.RCO@ssa.gov.
those that may be withheld from the
The information collection listed
public in accordance with the
below has been submitted to OMB for
provisions of 5 U.S.C. 552, will be
clearance. Your comments on the
available for inspection and copying in
information collection would be most
the Commission’s Public Reference
Room. Copies of such filing also will be useful if received by OMB and SSA
within 30 days from the date of this
available for inspection and copying at
publication. You can obtain a copy of
the principal office of the PCX.
All comments received will be posted the OMB clearance package by calling
the SSA Reports Clearance Officer at
without change; the Commission does
410–965–0454, or by writing to the
not edit personal identifying
address listed above.
information from submissions. You
Medicare Subsidy Quality Review
should submit only information that
you wish to make available publicly. All Case Analysis Forms—20 CFR
418(b)(5)—0960–0707. Under the aegis
submissions should refer to File
of the Medicare Modernization Act of
Number SR–PCX–2006–04 and should
2003, SSA will make Medicare Part D
be submitted on or before March 1,
subsidy determinations for the Medicare
2006.
Prescription Drug program for Medicare
For the Commission, by the Division of
beneficiaries with limited income and
Market Regulation, pursuant to delegated
resources. The subsidy determination is
52
authority.
based on applicants’ answers to
Nancy M. Morris,
questions about categories such as
Secretary.
household size, income, and resources.
[FR Doc. E6–1730 Filed 2–7–06; 8:45 am]
This information is self-reported by
BILLING CODE 8010–01–P
applicants using form OMB No. 0960–
0696 (SSA–1020), and thus, SSA needs
a way to determine if this form is being
SOCIAL SECURITY ADMINISTRATION
completed accurately and completely
and a way to validate its determination
Agency Information Collection
decisions. To this end, SSA will use the
Activities: Proposed Request
Medicare Quality Review system to
check the accuracy of the determination.
The Social Security Administration
In this system, SSA will conduct phone
(SSA) publishes a list of information
interviews with selected applicants and
52 17 CFR 200.30–3(a)(12).
will confirm information such as
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
E:\FR\FM\08FEN1.SGM
08FEN1
]]>Agencies
[Federal Register Volume 71, Number 26 (Wednesday, February 8, 2006)]
[Notices]
[Pages 6530-6535]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-1730]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53202; File No. SR-PCX-2006-04]
Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
the Certificate of Incorporation of PCX Holdings, Inc.
January 31, 2006.
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 January 27, 2006, 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 PCX. PCX filed the proposed
rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and Rule
19b-4(f)(6) thereunder,\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 from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
PCX proposes to submit to the Commission a proposed rule change to
further extend certain temporary exceptions from the voting and
ownership limitations in the certificate of incorporation of PCX
Holdings, Inc. (``PCXH''), a Delaware corporation and a parent company
of PCX, originally approved by the Commission in an order issued on
September 22, 2005 (the ``SEC Order'') \5\ and extended pursuant to a
proposed rule change filed with the Commission on December 19, 2005
(the ``Original Extension Rule Filing'') \6\ and amended on December
23, 2005,\7\ so as to allow: (a) Archipelago Holdings, Inc.
(``Archipelago''), a Delaware corporation and the ultimate parent
company of PCXH and PCX, to continue to (i) own Wave Securities, L.L.C.
(``Wave'') and (ii) own and operate the ATS Inbound Router Function (as
defined below) of
[[Page 6531]]
Archipelago Trading Services, Inc. (``ATS'') and the Inbound Router
Clearing Function (as defined below) of Archipelago Securities, L.L.C.
(``Archipelago Securities''); and (b) Gerald D. Putnam, Chairman and
Chief Executive Officer of Archipelago (``Mr. Putnam''), to own in
excess of 5% of Terra Nova Trading, L.L.C. (``TNT'') and continue to
serve as a director of TAL Financial Services (``TAL''), in each case
until the earlier of (x) the closing date of the merger of Archipelago
and the New York Stock Exchange, Inc. (the ``Archipelago NYSE Merger'')
and (y) March 31, 2006.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 52497 (September 22,
2005), 70 FR 56949 (September 29, 2005) (SR-PCX-2005-90) (the ``SEC
Order'').
\6\ See Pacific Exchange, Inc., Proposed Rule Change Relating to
the Certificate of Incorporation of PCX Holdings, Inc., File No. SR-
PCX-2005-139 (December 19, 2005).
\7\ See Amendment No. 1 to the Original Extension Rule Filing
(December 23, 2005).
---------------------------------------------------------------------------
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
1. Purpose
a. PCXH Acquisition and the Amendment of the PCXH Certificate of
Incorporation. Archipelago operates the Archipelago Exchange
(``ArcaEx''), an open, all-electronic stock market for the trading of
equity securities. On September 26, 2005, Archipelago completed its
acquisition of PCXH and all of its wholly-owned subsidiaries, including
PCX and PCXE (the ``PCXH Acquisition''). The PCXH Acquisition was
accomplished by way of a merger of PCXH with a wholly-owned subsidiary
of Archipelago, with PCXH being the surviving corporation in the merger
and becoming a wholly-owned subsidiary of Archipelago.
The certificate of incorporation of PCXH (as amended to date, the
``PCXH Certificate of Incorporation'') contains various ownership and
voting restrictions on PCXH's capital stock, which are designed to
safeguard the independence of the self-regulatory functions of PCX and
to protect the Commission's oversight responsibilities. In order to
allow Archipelago to own 100% of the capital stock of PCXH, prior to
the completion of the PCXH Acquisition, PCX filed with the Commission a
proposed rule change which sought to, among other things, amend the
PCXH Certificate of Incorporation to create an exception from the
voting and ownership restrictions for Archipelago and certain of its
related persons (the ``Original Rule Filing'').\8\ The Original Rule
Filing, as amended by Amendment No. 1 and Amendment No. 2 thereto, was
approved by the Commission on September 22, 2005 \9\ and the amended
PCXH Certificate of Incorporation became effective on September 26,
2005, upon the closing of the PCXH Acquisition.
---------------------------------------------------------------------------
\8\ See Pacific Exchange, Inc., Proposed Rule Change Relating to
the Certificate of Incorporation of PCX Holdings, Inc., PCX Rules,
and Bylaws of Archipelago Holdings, Inc., File No. SR-PCX-2005-90
(August 1, 2005).
\9\ See SEC Order.
---------------------------------------------------------------------------
Article Nine of the PCXH Certificate of Incorporation provides that
no Person,\10\ either alone or together with its Related Persons,\11\
may own, directly or indirectly, shares constituting more than 40% of
the outstanding shares of any class of PCXH capital stock,\12\ and that
no Person, either alone or together with its Related Persons who is a
trading permit holder of PCX or an equities trading permit holder of
PCXE, may own, directly or indirectly, shares constituting more than
20% of any class of PCXH capital stock.\13\ Furthermore, the PCXH
Certificate of Incorporation provides that, for so long as PCXH
controls, directly or indirectly, PCX, no Person, either alone or with
its Related Persons, may directly or indirectly vote or cause the
voting of shares of PCXH capital stock or give any proxy or consent
with respect to shares representing more than 20% of the voting power
of the issued and outstanding PCXH capital stock.\14\ The PCXH
Certificate of Incorporation also places limitations on the right of
any Person, either alone or with its Related Persons, to enter into any
agreement with respect to the withholding of any vote or proxy.\15\
---------------------------------------------------------------------------
\10\ ``Person'' is defined to mean an individual, partnership
(general or limited), joint stock company, corporation, limited
liability company, trust or unincorporated organization, or any
governmental entity or agency or political subdivision thereof. PCXH
Certificate of Incorporation, Article Nine, Section 1(b)(iv).
\11\ The term ``Related Person,'' as defined in the PCXH
Certificate of Incorporation, means (i) with respect to any person,
all ``affiliates'' and ``associates'' of such person (as such terms
are defined in Rule 12b-2 under the Act); (ii) with respect to any
person constituting a trading permit holder of PCX or an equities
trading permit holder of PCXE, any broker dealer with which such
holder is associated; and (iii) any two or more persons that have
any agreement, arrangement or understanding (whether or not in
writing) to act together for the purpose of acquiring, voting,
holding or disposing of shares of the capital stock of PCXH. PCXH
Certificate of Incorporation, Article Nine, Section 1(b)(iv).
\12\ PCXH Certificate of Incorporation, Article Nine, Section
1(b)(i). However, such restriction may be waived by the Board of
Directors of PCXH pursuant to an amendment to the Bylaws of PCXH
adopted by the Board of Directors, if, in connection with the
adoption of such amendment, the Board of Directors adopts a
resolution stating that it is the determination of such Board that
such amendment will not impair the ability of PCX to carry out its
functions and responsibilities as an ``exchange'' under the Act and
is otherwise in the best interests of PCXH and its stockholders and
PCX, and will not impair the ability of the Commission to enforce
said Act, and such amendment shall not be effective until approved
by said Commission; provided that the Board of Directors of PCXH
shall have determined that such Person and its Related Persons are
not subject to any applicable ``statutory disqualification'' (within
the meaning of Section 3(a)(39) of the Act). PCXH Certificate of
Incorporation, Article Nine, Sections 1(b)(i)(B) and 1(b)(i)(C).
\13\ Id., Article Nine, Section 1(b)(ii).
\14\ Id., Article Nine, Section 1(c).
\15\ Id.
---------------------------------------------------------------------------
PCX proposed and the Commission approved an exception from the
ownership and voting limitations described above to add a new paragraph
at the end of Article Nine of the PCXH Certificate of Incorporation,
which provides that for so long as Archipelago directly owns all of the
outstanding capital stock of PCXH, these ownership and voting
limitations shall not be applicable to the ownership and voting of
shares of PCXH by (i) Archipelago, (ii) any Person which is a Related
Person of Archipelago, either alone or together with its Related
Persons, and (iii) any other Person to which Archipelago is a Related
Person, either alone or together with its Related Persons.\16\ These
exceptions to the ownership and voting limitations, however, shall not
apply to any ``Prohibited Persons,'' \17\ which is defined to mean any
Person that is, or that has a Related Person that is (i) an OTP Holder
or an OTP Firm (as defined in the rules of PCX) \18\ or (ii) an ETP
Holder (as defined in the rules of PCXE),\19\ unless such Person is
also a
[[Page 6532]]
``Permitted Person'' under the PCXH Certificate of Incorporation.\20\
The PCXH Certificate of Incorporation further provides that any
Prohibited Person not covered by the definition of a Permitted Person
who is subject to and exceeds the voting and ownership limitations
imposed by Article Nine as of the date of the closing of the PCXH
Acquisition shall be permitted to exceed the voting and ownership
limitations imposed by Article Nine only to the extent and for the time
period approved by the Commission.\21\
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\16\ Id., Article Nine, Section 4.
\17\ Id.
\18\ PCX rules define an ``OTP Holder'' to mean any natural
person, in good standing, who has been issued an Options Trading
Permit (``OTP'') by the Exchange for effecting approved securities
transactions on the Exchange's trading facilities, or has been named
as a Nominee. PCX Rule 1.1(q). The term ``Nominee'' means an
individual who is authorized by an ``OTP Firm'' (a sole
proprietorship, partnership, corporation, limited liability company
or other organization in good standing who holds an OTP or upon whom
an individual OTP Holder has conferred trading privileges on the
Exchange's trading facilities) to conduct business on the Exchange's
trading facilities and to represent such OTP Firm in all matters
relating to the Exchange. PCX Rule 1.1(n).
\19\ PCXE rules define an ``ETP Holder'' to mean any sole
proprietorship, partnership, corporation, limited liability company
or other organization in good standing that has been issued an
Equity Trading Permit, a permit issued by the PCXE for effecting
approved securities transactions on the trading facilities of PCXE.
PCXE Rule 1.1(n).
\20\ ``Permitted Person'' is defined to mean (A) any broker or
dealer approved by the Commission after June 20, 2005 to be a
facility (as defined in Section 3(a)(2) of the Act) of PCX; (B) any
Person that has been approved by the Commission prior to it becoming
subject to the provisions of Article Nine of the PCXH Certificate of
Incorporation with respect to the voting and ownership of shares of
PCXH capital stock by such Person; and (C) any Person that is a
Related Person of Archipelago solely by reason of beneficially
owning, either alone or together with its Related Persons, less than
20% of the outstanding shares of Archipelago capital stock. PCXH
Certificate of Incorporation, Article Nine, Section 4.
\21\ Id.
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b. Wave. Wave is an introducing broker for Archipelago's
institutional customers and provides such customers with access to
ArcaEx and other market centers. Because Wave, a broker-dealer and an
ETP Holder of PCXE, is a wholly-owned subsidiary and, consequently, a
Related Person, of Archipelago, it falls within the definition of
``Prohibited Persons'' under the PCXH Certificate of Incorporation.
Consequently, absent an exception, Archipelago's ownership of PCXH
would cause Wave, as an ETP Holder, to exceed the voting and ownership
limitations imposed by Article Nine of the PCXH Certificate of
Incorporation. Therefore, in connection with the PCXH Acquisition, PCX
requested a temporary exception from the ownership and voting
limitations in the PCX Certificate of Incorporation for Archipelago's
ownership of Wave until December 31, 2005, subject to the condition
that during that interim period Archipelago would continue to maintain
and comply with its current information barriers between Wave, on the
one hand, and PCX, PCXE and other subsidiaries of Archipelago that are
facilities of PCX or PCXE, on the other hand.\22\
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\22\ See Original Rule Filing at 36-37 and Amendment No. 2 to
the Original Rule Filing (September 16, 2005) (``Amendment No. 2''),
at 4.
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The Commission approved PCX's rule proposal regarding Wave (the
``Original Wave Exception'').\23\ In the SEC Order, the Commission
stated that the affiliation of an exchange with one of its members that
provides inbound access to the exchange--in direct competition with
other members of the exchange--raises potential conflicts of interest
between the exchange's regulatory responsibilities and its commercial
interests, and the potential for unfair competitive advantage that the
affiliated member could have by virtue of informational or operational
advantages, or the ability to receive preferential treatment.\24\
However, noting that the conditions to be imposed during the interim
period were designed to mitigate potential conflicts of interest and
the potential for unfair competitive advantage, the Commission
concluded that it would be appropriate and consistent with the Act to
allow a limited, temporary exception for Archipelago to continue its
ownership of Wave.\25\ In granting the approval for the Original Wave
Exception, the Commission also noted that in addition to being a member
of PCX, Wave is a member of the National Association of Securities
Dealers, Inc. (``NASD''), a self-regulatory organization (``SRO'') not
affiliated with Archipelago, and the NASD has been designated by the
Commission as the ``Designated Examining Authority'' for Wave pursuant
to Rule 17d-1 of the Act.\26\ Furthermore, during the interim period,
Wave would continue to be covered by the scope of an agreement between
NASD and PCX, which was entered into pursuant to Rule 17d-2 under the
Act \27\ (the ``17d-2 Agreement'') and provides for a plan concerning
the regulatory responsibilities of NASD with respect to certain members
of PCX, including Wave.\28\
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\23\ See SEC Order at 56960.
\24\ Id. at 56959.
\25\ Id.
\26\ Id. Pursuant to Rule 17d-1 under the Act, where a member of
the Securities Investor Protection Corporation is a member of more
than one SRO, the Commission shall designate to one of such
organizations the responsibility of examining such member for
compliance with the applicable financial responsibility rules. In
making such designation, the Commission shall take into
consideration the regulatory capabilities and procedures of the
SROs, availability of staff, convenience of location, unnecessary
regulatory duplication, and such other factors as the Commission may
consider germane to the protection of investors, the cooperation and
coordination among SROs, and the development of a national market
system for the clearance and settlement of securities transactions.
17 CFR 240.17d-1.
\27\ Rule 17d-2 under the Act provides that any two or more SROs
may file with the Commission a plan for allocating among such SROs
the responsibilities to receive regulatory reports from persons who
are members or participants of more than one of such SROs to examine
such persons for compliance, or to enforce compliance by such
persons, with specified provisions of the Act, the rules and
regulations thereunder, and the rules of such SROs, or to carry out
other specified regulatory functions with respect to such persons.
17 CFR 240.17d-2.
\28\ See SEC Order at 56959.
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In accordance with the terms of the Original Wave Exception,
Archipelago has been working to sell its ownership interests in Wave.
On December 19, 2005, the Exchange submitted the Original Extension
Rule Filing requesting an extension of the Original Wave Exception to
January 31, 2006, subject to the same conditions as applied to the
Original Wave Exception described above.\29\ The extension took effect
immediately upon the filing of the Original Extension Rule Filing (the
``Original Wave Extension''). On January 19, 2006, Archipelago entered
into a definitive agreement for the sale of Wave. The definitive
agreement conditions the sale on the satisfaction of a number of
closing conditions, including the receipt of certain regulatory
approvals, and Archipelago intends to complete the sale as soon as
possible following the satisfaction of these conditions.
---------------------------------------------------------------------------
\29\ The Original Extension Rule Filing at 13-14.
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c. ATS Inbound Router Function and the Inbound Router Clearing
Function. Archipelago currently owns ATS, a wholly owned subsidiary
that is a broker-dealer and an ETP Holder of PCXE. The business of ATS
consists of, among other things, acting as an introducing broker for
non-ETP Holder broker or dealer clients for securities traded on ArcaEx
(the ``ATS Inbound Router Function''). Archipelago Securities, a
wholly-owned subsidiary of Archipelago, is a registered broker-dealer,
a member of the NASD and an ETP Holder. In addition to its other
functions, Archipelago Securities provides clearing functions for
trades executed by the ATS Inbound Router Function (the ``Inbound
Router Clearing Function'').
Because ATS, a broker-dealer and an ETP Holder of PCXE, is a
wholly-owned subsidiary and, consequently, a Related Person, of
Archipelago, it falls within the definition of ``Prohibited Persons''
under the PCXH Certificate of Incorporation. Consequently, absent an
exception, Archipelago's ownership of PCXH would cause ATS to exceed
the voting and ownership limitations imposed by Article Nine of the
PCXH Certificate of Incorporation. Likewise, because Archipelago
Securities, a broker-dealer and an ETP Holder of PCXE, is a wholly
owned subsidiary and, consequently, a Related Person, of Archipelago,
and the approvals of
[[Page 6533]]
Archipelago Securities set forth elsewhere in the SEC Order were
limited in scope and did not include its Inbound Router Clearing
Function, it falls within the definition of ``Prohibited Persons''
under the PCXH Certificate of Incorporation. Consequently, absent an
exception, Archipelago's ownership of PCXH would cause Archipelago
Securities to exceed the voting and ownership limitations imposed by
Article Nine of the PCXH Certificate of Incorporation.
Therefore, in connection with the PCXH Acquisition, PCX requested a
temporary exception from the ownership and voting limitations in the
PCX Certificate of Incorporation for Archipelago's ownership and
operation of the ATS Inbound Router Function and the Inbound Router
Clearing Function until the earlier of (i) the closing date of the
Archipelago NYSE Merger and (ii) March 31, 2006, subject to the
following conditions: (1) The revenues derived by Archipelago from the
ATS Inbound Router Function will not exceed 7% of the consolidated
revenues of Archipelago (determined on a quarterly basis); (2) the ATS
Inbound Router Function will not accept any new clients following the
closing of Archipelago's acquisition of PCXH; and (3) Archipelago will
continue to maintain and comply with its current information barrier
between the ATS Inbound Router Function on the one hand and PCX, PCXE
and the other subsidiaries of Archipelago that are facilities of PCX or
PCXE on the other hand.\30\ The Commission approved PCX's rule proposal
regarding the ATS Inbound Router Function and the Inbound Router
Clearing Function (the ``Original Inbound Router Exception'').\31\ In
the SEC Order, the Commission stated that the affiliation of an
exchange with one of its members that provides inbound access to the
exchange--in direct competition with other members of the exchange--
raises potential conflicts of interest between the exchange's
regulatory responsibilities and its commercial interests, and the
potential for unfair competitive advantage that the affiliated member
could have by virtue of informational or operational advantages, or the
ability to receive preferential treatment.\32\ However, noting that the
conditions to be imposed during the interim period were designed to
mitigate potential conflicts of interest and the potential for unfair
competitive advantage, the Commission concluded that it would be
appropriate and consistent with the Act to allow a limited, temporary
exception for Archipelago to continue its ownership of the ATS Inbound
Router Function and the Inbound Router Clearing Function.\33\ In
granting the approval for the Original Inbound Router Exception, the
Commission also noted that in addition to being a member of PCX, ATS is
a member of the NASD and the NASD has been designated by the Commission
as the ``Designated Examining Authority'' for ATS pursuant to Rule 17d-
1 of the Act.\34\ Furthermore, during the interim period, ATS would
continue to be covered by the scope of the 17d-2 Agreement,\35\ which
provides for a plan concerning the regulatory responsibilities of NASD
with respect to certain members of PCX, including ATS.\36\
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\30\ See Amendment No. 2 at 5-6.
\31\ See SEC Order at 56960.
\32\ Id. at 56959.
\33\ Id.
\34\ Id. See supra note 26 for a description of Rule 17d-1 under
the Act.
\35\ See supra note 27.
\36\ See SEC Order at 56959.
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In accordance with the terms of the Original Inbound Router
Exception, Archipelago has been working to sell its ownership interest
in the ATS Inbound Router Function. Given the uncertainty of the
closing date of the Archipelago NYSE Merger, in the Original Extension
Rule Filing, as amended by Amendment No. 1 thereto, the Exchange
requested an extension of the Original Inbound Router Exception to
January 31, 2006, subject to the same conditions as applied to the
Original Inbound Router Exception described above.\37\ The extension
took effect immediately upon the filing of Amendment No. 1 to the
Original Extension Rule Filing (the ``Original Inbound Router
Extension''). On December 23, 2005, Archipelago entered into a
definitive agreement for the sale of the ATS Inbound Router Function to
Order Execution Services Holdings, Inc. (``OES'').\38\ The definitive
agreement conditions the sale on the satisfaction of a number of
closing conditions, including the receipt of NASD and other regulatory
approvals, and Archipelago intends to complete the sale as soon as
possible following the satisfaction of these conditions.
---------------------------------------------------------------------------
\37\ Original Extension Rule Filing at 13-14, and Amendment No.
1 to the Original Extension Rule Filing at 6.
\38\ OES is neither a Related Person of Archipelago nor a
``Prohibited Person'' under the PCXH Certificate of Incorporation.
---------------------------------------------------------------------------
d. TNT. TNT is a wholly owned subsidiary of TAL. Mr. Putnam
indirectly owns in excess of 5% of TNT and serves as a director of
TAL.\39\ Because TNT, a broker-dealer and an ETP Holder of PCXE, is a
Related Person of Archipelago by virtue of Mr. Putnam's ownership of in
excess of 5% of TNT and service as a director of TAL, it falls within
the definition of ``Prohibited Persons'' under the PCXH Certificate of
Incorporation. Consequently, absent an exception, Archipelago's
ownership of PCXH would cause TNT to exceed the voting and ownership
limitations imposed by Article Nine of the PCXH Certificate of
Incorporation. Therefore, in connection with the PCXH Acquisition, the
Commission approved the Exchange's request for a temporary exception
for Mr. Putnam to continue to own in excess of 5% of TNT and continue
to serve as a director of TAL until December 31, 2005 (the ``Original
TNT Exception'').\40\ In the SEC Order, the Commission stated that it
believes that such a temporary exception is appropriate and consistent
with the Act because it will eliminate the affiliation between TNT and
Archipelago but allow Mr. Putnam a reasonable amount of time to
effectuate such actions necessary to eliminate the affiliation.\41\
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\39\ PCX clarified that Mr. Putnam's ownership in TNT is
indirect. Telephone conversation between Kevin J.P. O'Hara, General
Counsel, PCX and Jennifer Dodd, Special Counsel, Division of Market
Regulation, Commission, on January 30, 2006 (``Telephone
Conversation'').
\40\ See SEC Order at 56960.
\41\ Id.
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Mr. Putnam has been working to eliminate the affiliation with TNT.
In light of the fact that the sale of Mr. Putnam's interest in TNT was
unlikely to be consummated by December 31, 2005, in the Original
Extension Rule Filing, as amended by Amendment No. 1 thereto, the
Exchange also requested an extension of the Original TNT Exception to
January 31, 2006.\42\ The extension took effect immediately upon the
filing of Amendment No. 1 to the Original Extension Rule Filing (the
``Original TNT Extension'').
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\42\ Original Extension Rule Filing at 14, and Amendment No.1 to
the Original Extension Rule Filing at 6.
---------------------------------------------------------------------------
e. Further Extensions of the Temporary Exceptions.
i. Wave. On January 19, 2006, Archipelago entered into a definitive
agreement for the sale of Wave.\43\ The definitive agreement conditions
the sale on the satisfaction of a number of closing conditions,
including the receipt of certain regulatory approvals, and Archipelago
intends to complete the sale as soon as possible following the
satisfaction of these conditions. The Original Wave Extension expires
on January 31, 2006. In light of the fact that
[[Page 6534]]
the sale is unlikely to be consummated by January 31, 2006, the
Exchange hereby proposes to further extend the Original Wave Exception
to the earlier of (x) the closing date of the Archipelago NYSE Merger
and (y) March 31, 2006, subject to the same conditions as applied to
the Original Wave Exception described above. In requesting such
extension, Archipelago and the Exchange note that the NASD is the
``Designated Examining Authority'' for Wave pursuant to Rule 17d-1 of
the Act. Furthermore, during the interim period, Wave would continue to
be covered by the scope of the 17d-2 Agreement, which provides for a
plan concerning the regulatory responsibilities of NASD with respect to
certain members of PCX, including Wave. Archipelago and the Exchange
believe that this extension would be in keeping with the policy
justifications for the Original Wave Exception and the Original Wave
Extension outlined above, while allowing Archipelago to complete the
sale of Wave.
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\43\ The purchaser of Wave is neither a Related Person of
Archipelago nor a ``Prohibited Person'' under the PCXH Certificate
of Incorporation.
---------------------------------------------------------------------------
ii. ATS Inbound Router Function and the Inbound Router Clearing
Function. On December 23, 2005, Archipelago entered into a definitive
agreement for the sale of the ATS Inbound Router Function to OES.\44\
The definitive agreement conditions the sale on the satisfaction of a
number of closing conditions, including the receipt of NASD and other
regulatory approvals, and Archipelago intends to complete the sale as
soon as possible following the satisfaction of these conditions. The
Original Inbound Router Extension expires on January 31, 2006. Because
of the uncertainties associated with the timing of the regulatory
approvals, it is unclear whether Archipelago would be able to complete
the sale by January 31, 2006. Therefore, the Exchange hereby proposes
to further extend the Original Inbound Router Exception to the earlier
of (x) the closing date of the Archipelago NYSE Merger and (y) March
31, 2006, subject to the same conditions as applied to the Original
Wave Exception described above. In requesting such extension,
Archipelago and the Exchange note that the NASD is the ``Designated
Examining Authority'' for ATS pursuant to Rule 17d-1 of the Act.
Furthermore, during the interim period, ATS would continue to be
covered by the scope of the 17d-2 Agreement, which provides for a plan
concerning the regulatory responsibilities of NASD with respect to
certain members of PCX, including ATS. Archipelago and the Exchange
believe that this extension would be in keeping with the policy
justifications for the Original Inbound Router Exception and the
Original Inbound Router Extension outlined above, while allowing
Archipelago to complete the sale of the ATS Inbound Router Function.
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\44\ PCX clarified that the Inbound Router Clearing Function
will be discontinued after the sale of the ATS Inbound Router
Function subject only to the provision of transition services by
Archipelago Securities to OES, and that PCX intends to file a
proposed rule change requesting approval of such services. Telephone
Conversation.
---------------------------------------------------------------------------
iii. TNT. Mr. Putnam has been working to eliminate the affiliation
with TNT. Once he has reduced his interest in TNT, Mr. Putnam would
also cease serving as a director of TAL.\45\ The Original TNT Extension
expires on January 31, 2006. In light of the fact that the sale of Mr.
Putnam's interest in TNT is unlikely to be consummated by January 31,
2006, the Exchange hereby proposes to extend the Original TNT Exception
to the earlier of (x) the closing date of the Archipelago NYSE Merger
and (y) March 31, 2006. In requesting such extension, Archipelago and
the Exchange note that the NASD is the ``Designated Examining
Authority'' for TNT pursuant to Rule 17d-1 of the Act. Furthermore,
during the interim period, TNT would continue to be covered by the
scope of the 17d-2 Agreement, which provides for a plan concerning the
regulatory responsibilities of NASD with respect to certain members of
PCX, including TNT. Archipelago and the Exchange believe that this
extension would be in keeping with the policy justifications for the
Original TNT Exception and the Original TNT Extension outlined above,
while allowing Mr. Putnam a reasonable amount of time to effectuate the
actions necessary to eliminate the affiliation between TNT and
Archipelago.
---------------------------------------------------------------------------
\45\ PCX clarified that Mr. Putnam would cease serving as a
director of TAL once he has reduced his interest in TNT. Telephone
Conversation.
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2. Statutory Basis
The Exchange believes that the proposed rule change in this filing
is consistent with Section 6(b) \46\ of the Act, in general, and
furthers the objectives of Section 6(b)(1),\47\ in particular, in that
it enables the Exchange to be so organized so as to have the capacity
to be able to carry out the purposes of the Act and to comply, and
(subject to any rule or order of the Commission pursuant to Section
17(d) or 19(g)(2) of the Act) to enforce compliance by its exchange
members and persons associated with its exchange members, with the
provisions of the Act, the rules and regulations thereunder, and the
rules of the Exchange. The Exchange also believes that this filing
furthers the objectives of Section 6(b)(5),\48\ in particular, because
the rules summarized herein would create a governance and regulatory
structure with respect to the operation of the equities and options
business of PCX that is designed to help 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; and 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.
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\46\ 15 U.S.C. 78f(b).
\47\ 15 U.S.C. 78f(b)(1).
\48\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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
Because the foregoing proposed rule change does not: (1)
Significantly affect the protection of investors or the public
interest; (2) impose any significant burden on competition; and (3)
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) \49\ of the Act and Rule 19b-
4(f)(6) thereunder.\50\ 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.
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\49\ 15 U.S.C. 78s(b)(3)(A).
\50\ 17 CFR 240.19b-4(f)(6). The Exchange provided the
Commission with written notice of its intent to file this proposed
rule change on January 23, 2006.
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[[Page 6535]]
PCX has asked the Commission to waive the 30-day operative delay.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
Because the Original Wave Extension, the Original Inbound Router
Extension and the Original TNT Extension each expire on January 31,
2006, such waiver will allow each of Wave, ATS (with respect to the ATS
Inbound Router Function), Archipelago Securities (with respect to the
Inbound Router Clearing Function), and TNT to remain in compliance with
the voting and ownership limitations in the PCXH Certificate of
Incorporation. The Commission notes that the Exchange has represented
that Archipelago entered into definitive agreements for the sale of
Wave on January 19, 2006 and for the sale of the ATS Inbound Router
Function on December 23, 2005. The time period for each of the
extensions is short and will terminate on the earlier of (1) the
closing date of the Archipelago NYSE Merger and (2) March 31, 2006. In
addition, the Commission notes that the following protections are and
will continue to be in place during the interim period: (i) Wave, ATS,
and TNT are members of the NASD as well as PCX, (ii) the NASD is the
Designated Examining Authority for Wave, ATS, and TNT pursuant to Rule
17d-1 of the Act, and (iii) Wave, ATS, and TNT are, and will continue
to be during the extension, covered by the scope of the 17d-2
Agreement. Further, Archipelago's ownership and operation of Wave, the
ATS Inbound Router Function of ATS, and the Inbound Router Clearing
Function of Archipelago Securities will continue to be subject to the
same conditions as the Original Wave Exception and the Original Inbound
Router Exception, as described above and as approved by the Commission
in the SEC Order.
For these reasons, the Commission designates the proposal to be
effective and operative upon filing with the Commission.\51\
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\51\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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-2006-04 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-PCX-2006-04. 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 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-2006-04
and should be submitted on or before March 1, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\52\
Nancy M. Morris,
Secretary.
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\52\ 17 CFR 200.30-3(a)(12).
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[FR Doc. E6-1730 Filed 2-7-06; 8:45 am]
BILLING CODE 8010-01-P
