On October 21, 2003, the Pacific Exchange, Inc. (“PCX” or “Exchange”), through its wholly-owned subsidiary PCX Equities, Inc. (“PCXE”), filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and Rule 19b-4 thereunder, a proposed rule change to amend its rules governing Market Maker obligations on the Archipelago Exchange (“ArcaEx”), the equities trading facility of PCXE. The PCX filed Amendment No. 1 to the proposal on December 2, 2003. The proposed rule change, as amended, was published for comment in the Federal Register on December 29, 2003. The Commission received no comment letters on the proposal. This order approves the proposed rule change, as amended.
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  and, in particular, the requirements of Section 6 of the Act  and the rules and regulations thereunder. Specifically, the Commission believes that the proposed rule change is consistent with Section 6(b), which, among other things, requires that the PCX's rules be designed to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Commission notes that the PCX's restrictions on Market Makers requiring them to become odd-lot dealers and to maintain cleanup orders in the securities in which they maintain a market currently impose a competitive barrier vis-à-vis other market centers in attracting Market Maker participation on ArcaEx because competing market centers do not impose such requirements. The Commission notes that the Exchange believes that eliminating the aforementioned requirements will facilitate additional Market Maker participation on ArcaEx and will further enhance order interaction, provide greater depth in liquidity, and foster price competition. Moreover, the Exchange believes that the elimination of such requirements will place ArcaEx on a level playing field with other market centers and allow ArcaEx to fairly compete for Market Maker, and that the impact on the system from removing these requirements for Market Makers would be minimal on the ArcaEx.Start Printed Page 6357
It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change and Amendment No. 1 thereto (File No. SR-PCX-2003-59) are approved.Start Signature
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Margaret H. McFarland,
3. Amendment No. 1 replaces the originally filed Form 19b-4 in its entirety.Back to Citation
4. See Securities Exchange Act Release No. 48928 (December 16, 2003), 68 Fr 75010 (December 29, 2003).Back to Citation
5. In approving this proposed rule change, the Commission notes that it has considered its impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).Back to Citation
8. See e.g., NASD Rules 4611 and 4612.Back to Citation
9. See note 4, supra.Back to Citation
[FR Doc. 04-2811 Filed 2-9-04; 8:45 am]
BILLING CODE 8010-01-P