A key part of the Pacific Exchange's operations will be taken over by the New York Stock Exchange as part of a set of mergers that is putting the San Francisco options-trading organization in the Big Board's hands.
A regulatory filing Thursday disclosed that Pacific's regulatory duties - - one of the critical functions of a securities exchange -- will be folded into a new, nonprofit governance arm of the New York Stock Exchange when the twin mergers are completed. The document left unanswered what Pacific Exchange operations, if any, will remain in San Francisco and how many of the exchange's 260 employees will keep their jobs.
The Pacific Exchange -- descendant of the San Francisco stock market that opened in 1882 -- plans to close its shrinking options-trading floor by next year, a reflection of the industry shift to electronic trading.
If Pacific's administrative functions are also shut or moved, that would end San Francisco's more-than-120-year history as a venue for a securities trading exchange.
The New York Stock Exchange plans to merge by early 2006 with Archipelago Holdings, a leading electronic-trading firm in Chicago that five years ago acquired Pacific's stock-trading operations.
Archipelago, in turn, is the prospective owner of the Pacific Exchange's options-trading operations in San Francisco. That deal, announced in January, is expected to close in September. Archipelago also would acquire Pacific's self-regulatory license, which allows Pacific to act as the compliance watchdog over ArcaEx, the all-electronic stock market owned by Archipelago.
"Upon completion of the mergers, NYSE Regulation will continue to be responsible for the regulation of NYSE members, member organizations and their employees. It will also incorporate the regulatory responsibilities of the Pacific Exchange," merger documents filed with the Securities and Exchange Commission said.
The New York Stock Exchange has made clear that it is eager to diversify into the fast-growing options business -- which it would accomplish by acquiring Pacific. However, the implication for the Pacific Exchange's physical presence in San Francisco remains unclear, representatives of the three entities said Thursday.
"Until the Arca deal closes with New York, our folks will continue to do the job they've been doing," said Pacific Exchange spokesman Dale Carlson. "When you go to an electronic world, the regulators don't have to be in a particular place," Carlson added.
A proxy filing in the Pacific-Archipelago deal is expected by early August, Carlson said.
E-mail Jenny Strasburg at jstrasburg@sfchronicle.com.
After the New York Stock Exchange (NYSE) completes its acquisition of Chicago-based electronic trading company, Archipelago Holdings within the next 12 months, the impact will also be felt in San Francisco, California as the future of the 123-year-old Pacific Exchange (PCX) becomes murky.

This stems from a deal struck in January of this year, before the NYSE merger, when Archipelago struck a deal worth $83 million to take over operations of the San Francisco stock exchange and its 260 employees. All PCX operations are scheduled to be under Archipelago control by the end of September. Archipelago had planned to maintain the San Francisco operations.

As details were released Thursday of the April NYSE-Archipelago merger to the Securities and Exchange Commission, all Archipelago functions are to be folded into NYSE operations, including the PCX stock and options trading business. The report did not state whether or not the San Francisco employees would be kept after the merger is complete.

Started in 1882 at the San Francisco Stock Market, the Pacific Exchange, along with other regional stock exchanges, has suffered as customers shifted to electronic trading, which bypassed the need for stock exchange services in many instances.