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Self-Regulatory Organizations; Order Granting Approval to a Proposed Rule Change and Amendments No. 1 and 2 Thereto by the Pacific Exchange, Inc. Making Housekeeping Changes to its Options Trading Rules

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Start Preamble October 31, 2003.

On July 8, 2003, the Pacific Exchange, Inc. (“PCX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to amend its rules to clarify existing provisions, eliminate superfluous provisions, re-number rules where appropriate, and to otherwise update its rules. On September 10, 2003, the PCX filed Amendment No. 1 to the proposed rule change.[3]

The proposed rule change and Amendment No. 1 were published for comment in the Federal Register on September 29, 2003.[4] The Commission received no comments on the proposal. On September 24, 2003, the PCX filed Amendment No. 2 to the proposed rule change.[5]

The Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange [6] and, in particular, the requirements of Section 6 of the Act [7] and the rules and regulations thereunder. Specifically, the Commission finds that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Act [8] because it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of Start Printed Page 62862trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission finds that the proposed rule change, as amended, is also consistent with Section 6(b)(6) of the Act,[9] which requires that members and persons associated with members be appropriately disciplined for violations of Exchange rules.[10]

The Commission believes that the housekeeping changes proposed by the Exchange to PCX Rule 6 (“Options Trading—Rules Principally Applicable to Trading of Options Contracts”) and to other PCX rules should help to correct, clarify, and ensure consistency in and among the PCX's current rules and in the terminology used in those rules. The Commission notes that many of these housekeeping changes are the result of the incorporation of new or amended rules pursuant to the Commission's approval of PCX Plus.[11]

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,[12] that the proposed rule change (File No. SR-PCX-2003-31), as amended, is hereby approved.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[13]

Start Signature

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble


3.  Amendment No. 1 replaced the PCX's original Rule 19b-4 filing in its entirety.

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4.  See Securities Exchange Act Release No. 48522 (September 23, 2003), 68 FR 56029.

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5.  See letter from Tania J. Cho, Staff Attorney, Regulatory Policy, PCX, to Nancy J. Sanow, Assistant Director, Division of Market Regulation, Commission, dated September 23, 2003 (Amendment No. 2”). In Amendment No. 2, PCX made a technical correction to its rule text. Because this is a technical amendment, it is not subject to notice and comment.

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6.  In approving this proposed rule change, as amended, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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10.  The Commission believes that PCX's amendment to PCX Rule 6.35 should help to clarify that Market Makers must apply for primary appointments and that a Market Maker's refusal to accept a primary appointment zone may be deemed a sufficient cause for termination or suspension of the Market Maker's registration.

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11.  See Securities Exchange Act Release No. 47838 (May 13, 2003), 68 FR 27129 (May 19, 2003) (File No. SR-PCX-2002-36) (order approving PCX Plus, the Exchange's new electronic platform for options trading).

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[FR Doc. 03-27993 Filed 11-5-03; 8:45 am]