Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Pacific Exchange Inc. Relating to Broker Hand Held Terminal Fees and Independent Broker Fees

[Federal Register Volume 64, Number 84 (Monday, May 3, 1999)]
[Notices]
[Pages 23722-23724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10986]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41333; File No. SR-PCX-99-08]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Pacific Exchange Inc. 
Relating to Broker Hand Held Terminal Fees and Independent Broker Fees

April 27, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 
1934\1\ (``Act''), and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 31, 1999, the Pacific Exchange, Inc. (``PCX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the Exchange. PCX has 
designated this proposal as one establishing or changing a due, fee or 
other charge imposed by PCX under Section 19(b)(3)(A)(ii) of the 
Act,\3\ which renders the proposal effective upon filing by the 
Commission. The Commission is publishing this notice to

[[Page 23723]]

solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange is proposing to change its Schedule of Fees and 
Charges for Exchange Services by modifying charges for the use of 
exchange sponsored hand held terminals for options floor brokers and 
eliminating independent broker charges. The text of the proposed rule 
change is available at the Office of the Secretary, PCX, and at the 
Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange 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
    Background. The Commission recently approved a proposal by the 
Exchange relating to fees for use of exchange sponsored hand held 
terminals for options floor brokers.\4\ In the filing the Exchange 
proposed a monthly equipment fee of $200 for each exchange sponsored 
hand held terminal and a $0.03 per contract charge for orders of 10 
contracts or less which are not directed to the Pacific Options 
Exchange Trading System (''POETS'') \5\ through a Member Firm Interface 
(``MFI'').
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    \4\ Securities Exchange Act Release No. 40644 (November 5, 
1998), 63 FR 63766 (November 16, 1998) (File No. SR-PCX-98-44).
    \5\ POETS is the Exchange's automated options trading system. 
See generally Securities Exchange Act Release No. 27633 (January 18, 
1990), 55 FR 2466 (January 24, 1990) (Order approving File No. SR-
PSE-89-26).
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    With the use of hand held terminals, PCX Member Firms have the 
advantage of sending their orders electronically to either (1) a Floor 
Broker's exchange sponsored terminal located in the trading crowd;\6\ 
(2) a Member Firm booth located on the trading floor; or (3) to POETS, 
where they will be automatically executed by Auto-Ex or maintained in 
Auto-Book.
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    \1\ Securities Exchange Act Release No. 39970 (May 7, 1998), 63 
FR 2662 (May 13, 1998).
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    Proposal. The Exchange now proposes to change its monthly equipment 
fee of $200 for each exchange sponsored hand held terminal to $300 to 
be billed to the Floor Broker registered to use it. The Exchange 
believes the change in the monthly fee more accurately reflects the 
costs of device and support hardware for the system over the useful 
life to the system. In addition, the Exchange proposes to permanently 
eliminate the charge of $0.03 per contract for orders of 10 contracts 
of less which are not directed to POETS through an MFI. Given the need 
to dedicate technology resources to other projects, the Exchange does 
not have the resources to make the necessary changes to implement the 
$0.03 per contract charge at this time.
    In addition, the Exchange charges Independent Floor Brokers a 
transaction charge of $0.02 per contract. In an effort to provide 
relief to the independent brokers on the Exchange floor, the Exchange 
proposes to permanently eliminate this charge.\7\ The Exchange proposes 
to eliminate this charge to help offset the high costs that Independent 
Floor Brokers incur while conducting business on the Options Floor. The 
Exchange notes that Indepdendent Brokers perform an important function 
on the Options Floor, particularly when a large influx of orders needs 
to be executed.
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    \7\ On February 13, 1998, PCX filed to waive the $0.02 per 
option contract charge to Independent Floor Brokers until further 
notice. The current filing eliminates the fee permanently. See, 
Exchange Act Release No. 39695 (February 24, 1998), 63 FR 10420 
(March 3, 1998).
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
Section 6(b)\8\ of the Act, in general, and furthers the objectives of 
Section 6(b)(4),\9\ in particular, because it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its members and issuers and other persons using its facilities.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Because the foregoing rule change establishes or changes a due, 
fee, or other charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A) of the Act \10\ and subparagraph (f) of 
Rule 19b-4 thereunder.\11\ At any time within 60 days of the filing of 
the proposed rule change, the Commission may summarily abrogate such 
rule change if it appears to the Commission that such action is 
necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 19b-4(f).
    \12\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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, N.W., Washington, D.C. 20549-0609. 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 number SR-PCX-99-08, and 
should be submitted by May 24, 1999.


[[Page 23724]]


    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-10986 Filed 4-30-99; 8:45 am]
BILLING CODE 8010-01-M