Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the Pacific Exchange, Inc. Relating to the Exchange's Designated Examination Fee Exemption

Table of Contents

March 9, 2004.

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 February 18, 2004, the Pacific Exchange, Inc. (“PCX” or “Exchange”), through its wholly-owned subsidiary PCX Equities, Inc. (“PCXE”), 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. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

The Exchange is proposing to amend the regulatory fee portion of its Schedule of Fees and Charges (“Fees”) in order to make a technical change to its Designated Examination Fee (“DEA”) Fee exemption. The text of the proposed rule change is attached as Exhibit A. The text of the proposed rule changes is available at the 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 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. 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, andStatutory Basis for, the Proposed Rule Change

1. Purpose

The Exchange is proposing to amend the regulatory fee portion of its Fees in order to make a technical change to the DEA Fee exemption.

On September 24, 2003, the Exchange submitted a filing with the Commission to amend the DEA Fee exemption. [3] In this filing, the Exchange amended the existing DEA Fee exemption to allow an exemption for any PCX Registered Floor Broker or Marker Maker [4] that effects at least 25% of all securities transactions, as measured in contract or share volume, on the PCX Floor or any other PCX Options trading facility, including PCX Plus. The amendment was intended to more accurately reflect the application of the exemption and references the Exchange's new trading platform, PCX Plus. This amendment became effective upon filing.

At this time, the Exchange proposes to make one technical change to the DEA Fee exemption, by adding the word “and” to the phrase “as measured in contract or share volume.” As revised, the phrase would read “as measured in contract and/or share volume.” The exemption is intended to be calculated using all securities transactions, as measured in contract and/or share volume. In other words, the 25% securities transactions threshold can be met based on either a combination of contracts and share volume, or exclusively contracts or share volume. The word “and” was inadvertently omitted from the previously filing and the Exchange wishes to make the technical correction at this time.

2. Statutory Basis

The Exchange believes that the proposal is consistent with Section 6(b) of the Act, [5] in general, and Section 6(b)(4) of the Act, [6] in particular, in that it provides for the equitable allocation of reasonable dues, fees and other charges among its members.

B. Self-Regulatory Organization's Statement on Burden on Competition

The Exchange does not believe that the proposed rule change will imposeany 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

The foregoing rule change has become effective pursuant to Section 19(b)(3) of the Act [7] and subparagraph (f) of Rule 19b-4. [8] At any time within 60 days of the filing of such 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.

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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address:rule-comments@sec.gov. All comment letters should refer to File No. SR-PCX-2004-11. This file number should be included on the subject line if e-mail is used. To help the Commission process and review comments more efficiently, comments should be sent in hardcopy or by e-mail but not by both methods. 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. SR-PCX-2004-11, and should be submitted by April 6, 2004.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority. [9]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1. 15 U.S.C. 78s(b)(1).

2. 17 CFR 240.19b-4.

3. See Securities Exchange Act Release No. 48569 (September 30, 2003), 68 FR 57721 (October 6, 2003) (SR-PCX-2003-52).

4. Pursuant to Rule 6.1(c)(2), the term “Market Maker” includes Lead Market Maker, Remote Market Maker, Floor Market Maker and Supplemental Market Maker.

5. 15 U.S.C. 78f(b).

6. 15 U.S.C. 78f(b)(5).

7. 15 U.S.C. 78f(b)(3).

8. 17 CFR 240.19b-4(f).

9. 17 CFR 200.30-3(a)(12).

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