Federal Register: November 19, 2002 (Volume 67, Number 223)
DOCID: FR Doc 02-29245
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-46804; File No. SR-PCX-2002-65]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by the Pacific Exchange, Inc. Relating to Exchange Fees and Charges
DOCUMENT SUMMARY:
November 8, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on September 27, 2002, the Pacific Exchange, Inc. (``PCX'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II and III below, which the PCX
has prepared. The PCX filed Amendment No. 1, which replaces the
original filing in its entirety, on November 7, 2002. The Commission is
publishing this notice to solicit comments from interested persons on the proposed rule change, as amended.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 217 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The PCX is proposing to amend its Schedule of Fees and Charges with
respect to the following fees for options: brokerdealer and market
maker transaction charges, the continued listings fee, and the
shortfall fee. The text of the proposed rule change is below. New text is italicized; deleted text is in brackets.
Schedule of Fees and Charges For Exchange Services PCX Options: TradeRelated Charges
Transactions:
Customer........................... $0.00 per contract side.
PCX Market Maker................... $0.21 per contract side.
Firm............................... $0.10 per contract side for customer facilitation.
Broker/Dealer...................... [$0.19] $0.21 per contract side.
PCX Options: Floor and Market Maker Fees
Continued Listings Fee................. Difference between $500 and
average monthly revenue for
issues with less than $500 in
volume based charges (average
monthly revenue based on
trailing 3 months). The fee
will be capped at $15,000 per
month per LLM firm.
Shortfall Fee.......................... $.35 per contract on shortfall volume.\*\
[sbull] Only applies to the top 120 options. Shortfall volume is
the difference between 12% of the total national market share in an
option issue for one month and the percentage executed by the LMM. For
the purpose of this calculation, the national market share of any equity option industry volume
[[Page 69797]]
will be capped at 2.9 million contracts per day.
* * * * *
II. SelfRegulatory 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 had 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 those statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
The PCX is proposing to change its brokerdealer transaction
charge, market maker transaction charges, continued listings fee, and
shortfall fee effective with the October 2002 trading month.\3\ Other
than the fees listed herein, the PCX does not seek to make any other changes to its fee schedule.
\3\ In its original filing, which the PCX filed with the
Commission on September 27, 2002, the PCX proposed to increase from
$0.21 to $0.26 the transaction fee imposed on members for orders that originate from nonPCX options market makers. The PCX
subsequently withdrew that particular proposed fee change when it
filed Amendment No. 1 with the Commission on November 7, 2002. 1. BrokerDealer Transaction Charge
The PCX currently imposes a fee of $0.19 per contract side on all transactions of brokerdealers. The PCX proposes to increase this fee to $0.21 per contract side, which would bring the transaction fee to the same level as the PCX Market Maker transaction charge.
2. Continued Listing Fee
The PCX currently imposes upon LMMs a continued listing fee for
issues that have not generated at least $500 in monthly revenues to the
PCX on a trailing threemonth average basis.\4\ The continued listing
fee is calculated as the incremental difference between the $500
threshold and the amount of revenue that the issue generates. The PCX
proposes to cap the amount of the continued listings fee that can be charged to an LMM firm at $15,000 per month per LMM firm.
\4\ See Securities Exchange Act Release No. 42050 (October 21, 1999), 64 FR 58117 (October 28, 1999) (SRPCX9932)
The PCX also proposes to modify the continued listing fee in order to adjust the method of calculating the average monthly volumebased charges for recently transferred issues. Currently, LMM firms that are transferred issues from another LMM assume the continued listings fee from the transferring firm. To help foster demand for issues during a period of continuing consolidation among trading firms, the PCX proposes to modify the way the continued listings fee is applied to transferred issues. Under the PCX's proposal, an LMM would not be subject to the continued listings fee for an issue that it acquired by transfer for any portion of the month that it acquired the issue, assuming a midmonth transfer. The LLM firm would be subject to a fee based upon the activity of the first full month that it trades an issue. After the second full month of trading the issue, the transferee LMM would be subject to a continued listings fee based upon the trailing twomonth activity level. In future months, the transferee LMM would be subject to the fee based on a threemonth rolling average. 3. Shortfall Fee
In June 2002, the PCX increased the LMM shortfall fee from 10% to 12% for the top 120 equity options traded nationally. Due to periodic spikes in national industry volume, the PCX proposes to cap the shortfall fee when equity industry volume reaches 2.9 million contracts per day or higher. As proposed, LMM firms would not be charged a shortfall fee on contracts in a top 120 issue that exceeds the calculated volume cap amount.
The PCX believe that the proposal is consistent with section
6(b)(4) of the Act \5\ in that it provides for the equitable allocation
of reasonable dues, fees and other charges among its members. \5\ 15 U.S.C. 78f(b)(4).
B. SelfRegulatory Organization's Statement on Burden on Competition
The PCX 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
The PCX neither solicited nor received written comments on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change, as amended, has become effective
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)\7\
because it changes the PCX fee schedule. At any time within 60 days
after the filing of Amendment No. 1 to the the proposed rule change,
the Commission may summarily abrogate the 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.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f).
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 205490609. 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 will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SRPCX200265 and should be submitted by December 10, 2002.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0229245 Filed 111802; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Pacific Exchange, Inc.,
DOCUMENT BODY 2:
November 8, 2002.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on September 27, 2002, the Pacific Exchange, Inc. (``PCX'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II and III below, which the PCX
has prepared. The PCX filed Amendment No. 1, which replaces the
original filing in its entirety, on November 7, 2002. The Commission is
publishing this notice to solicit comments from interested persons on the proposed rule change, as amended.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 217 CFR 240.19b4.
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The PCX is proposing to amend its Schedule of Fees and Charges with
respect to the following fees for options: brokerdealer and market
maker transaction charges, the continued listings fee, and the
shortfall fee. The text of the proposed rule change is below. New text is italicized; deleted text is in brackets.
Schedule of Fees and Charges For Exchange Services PCX Options: TradeRelated Charges
Transactions:
Customer........................... $0.00 per contract side.
PCX Market Maker................... $0.21 per contract side.
Firm............................... $0.10 per contract side for customer facilitation.
Broker/Dealer...................... [$0.19] $0.21 per contract side.
PCX Options: Floor and Market Maker Fees
Continued Listings Fee................. Difference between $500 and
average monthly revenue for
issues with less than $500 in
volume based charges (average
monthly revenue based on
trailing 3 months). The fee
will be capped at $15,000 per
month per LLM firm.
Shortfall Fee.......................... $.35 per contract on shortfall volume.\*\
[sbull] Only applies to the top 120 options. Shortfall volume is
the difference between 12% of the total national market share in an
option issue for one month and the percentage executed by the LMM. For
the purpose of this calculation, the national market share of any equity option industry volume
[[Page 69797]]
will be capped at 2.9 million contracts per day.
* * * * *
II. SelfRegulatory 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 had 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 those statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
The PCX is proposing to change its brokerdealer transaction
charge, market maker transaction charges, continued listings fee, and
shortfall fee effective with the October 2002 trading month.\3\ Other
than the fees listed herein, the PCX does not seek to make any other changes to its fee schedule.
\3\ In its original filing, which the PCX filed with the
Commission on September 27, 2002, the PCX proposed to increase from
$0.21 to $0.26 the transaction fee imposed on members for orders that originate from nonPCX options market makers. The PCX
subsequently withdrew that particular proposed fee change when it
filed Amendment No. 1 with the Commission on November 7, 2002. 1. BrokerDealer Transaction Charge
The PCX currently imposes a fee of $0.19 per contract side on all transactions of brokerdealers. The PCX proposes to increase this fee to $0.21 per contract side, which would bring the transaction fee to the same level as the PCX Market Maker transaction charge.
2. Continued Listing Fee
The PCX currently imposes upon LMMs a continued listing fee for
issues that have not generated at least $500 in monthly revenues to the
PCX on a trailing threemonth average basis.\4\ The continued listing
fee is calculated as the incremental difference between the $500
threshold and the amount of revenue that the issue generates. The PCX
proposes to cap the amount of the continued listings fee that can be charged to an LMM firm at $15,000 per month per LMM firm.
\4\ See Securities Exchange Act Release No. 42050 (October 21, 1999), 64 FR 58117 (October 28, 1999) (SRPCX9932)
The PCX also proposes to modify the continued listing fee in order to adjust the method of calculating the average monthly volumebased charges for recently transferred issues. Currently, LMM firms that are transferred issues from another LMM assume the continued listings fee from the transferring firm. To help foster demand for issues during a period of continuing consolidation among trading firms, the PCX proposes to modify the way the continued listings fee is applied to transferred issues. Under the PCX's proposal, an LMM would not be subject to the continued listings fee for an issue that it acquired by transfer for any portion of the month that it acquired the issue, assuming a midmonth transfer. The LLM firm would be subject to a fee based upon the activity of the first full month that it trades an issue. After the second full month of trading the issue, the transferee LMM would be subject to a continued listings fee based upon the trailing twomonth activity level. In future months, the transferee LMM would be subject to the fee based on a threemonth rolling average. 3. Shortfall Fee
In June 2002, the PCX increased the LMM shortfall fee from 10% to 12% for the top 120 equity options traded nationally. Due to periodic spikes in national industry volume, the PCX proposes to cap the shortfall fee when equity industry volume reaches 2.9 million contracts per day or higher. As proposed, LMM firms would not be charged a shortfall fee on contracts in a top 120 issue that exceeds the calculated volume cap amount.
The PCX believe that the proposal is consistent with section
6(b)(4) of the Act \5\ in that it provides for the equitable allocation
of reasonable dues, fees and other charges among its members. \5\ 15 U.S.C. 78f(b)(4).
B. SelfRegulatory Organization's Statement on Burden on Competition
The PCX 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. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
The PCX neither solicited nor received written comments on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change, as amended, has become effective
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)\7\
because it changes the PCX fee schedule. At any time within 60 days
after the filing of Amendment No. 1 to the the proposed rule change,
the Commission may summarily abrogate the 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.
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f).
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 205490609. 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 will also be available for inspection and copying at the principal office of the PCX. All submissions should refer to File No. SRPCX200265 and should be submitted by December 10, 2002.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\
\8\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0229245 Filed 111802; 8:45 am]
BILLING CODE 801001P