[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Notices]
[Pages 37192-37193]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15714]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48034; File No. SR-Phlx-2003-41]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Philadelphia Stock
Exchange, Inc. Relating to an Increase in the Technology Fee
June 16, 2003.
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 May 30, 2003, the Philadelphia Stock Exchange, Inc. (``Phlx'' 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 Phlx. The
Commission is publishing this notice to 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Phlx proposes to amend its schedule of dues, fees, and charges
to increase its technology fee from $150 per month to $950 per month
for Phlx members. The text of the proposed rule change is available at
the Office of the Secretary, the Phlx, and 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 Phlx 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 and is set forth in sections A, B, and C below.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Phlx proposes to amend its schedule of dues, fees, and charges
to increase its technology fee from $150 per month to $950 per month
for Phlx members. The technology fee is currently assessed on members
as well as on foreign currency options participants who do not also
hold legal title to a Phlx membership.\3\ The current proposal will
assess the $950 proposed technology fee on Phlx members. A foreign
currency options participant who does not also hold legal title to a
Phlx membership will continue to be assessed the current technology fee
of $150 per month, and not the increased fee of $950 per month.
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\3\ A foreign currency options participant who also holds legal
title to a Phlx membership is only assessed the fee once--in his or
her capacity as a Phlx member. For example, a foreign currency
options participant who also holds legal title to a Phlx membership
is currently assessed a total of $150 per month for the technology
fee. Under this proposal, a total of $950 per month would be
assessed for the technology fee. Equity Trading Permit holders/
organizations are not assessed the technology fee. See Securities
Exchange Act Release No. 45480 (February 26, 2002), 67 FR 10029
(March 5, 2002) (SR-Phlx-2002-10).
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In addition, the Exchange intends to amend a footnote related to
its technology fee, which appears on its schedule of dues, fees, and
charges, to clarify that foreign currency options participants that
hold legal title to an Exchange membership are assessed the technology
fee in their capacity as a Phlx member and not additionally in their
capacity as a foreign currency options participant.\4\ The Exchange
intends to implement this fee effective June 1, 2003.\5\
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\4\ The Phlx revised the footnote in its schedule of dues, fees,
and charges from what it had originally proposed in this rule
filing. The footnote relating to the technology fee will now state
the following: ``Foreign currency options participants who also hold
legal title to a Phlx membership are assessed the technology fee in
their capacity as a Phlx member, for that membership, and not
additionally in their capacity as a foreign currency options
participant. ETP holders/organizations are not assessed the
technology fee.'' Telephone conversation between Cynthia Hoekstra,
Counsel, Phlx, and Mia C. Zur, Attorney, Division of Market
Regulation (``Division''), Commission, on June 12, 2003.
\5\ The technology fee had heretofore been eligible for a
monthly credit of up to $1,000 to be applied against certain fees,
dues and charges and other amounts owed to the Exchange by certain
members. See Securities Exchange Act Release No. 44292 (May 11,
2001), 66 FR 27715 (May 18, 2001) (SR-Phlx-2001-49). This credit
program expired effective May 2003. The Exchange intends to file a
separate proposed rule change to remove references to the member
credit throughout the entire schedule of dues, fees and charges.
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The Phlx states that the technology fee was originally instituted
to reflect the costs of needed upgrades to the operating systems on the
Exchange's trading floors, system software modifications, year 2000
modifications, and hardware upgrades. Also, system development costs
for new risk management systems, order handling rule revisions,
specialized quote feeds, and new products were captured by this fee.\6\
Now, in addition to its original purpose, the Exchange believes the
revenue generated from the technology fee should provide for a source
of general funds to be used, for example, in connection with other
technology-related capital and expenses, such as the purchasing,
leasing, and maintenance of equipment and software, programming costs,
outside vendor charges, communications costs, and debt service for
funds borrowed in relation to the foregoing.
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\6\ See Securities Exchange Act Release Nos. 45289 (January 16,
2002), 67 FR 3525 (January 24, 2002) (SR-Phlx-2001-117), and 38394
(March 12, 1997), 62 FR 13204 (March 19, 1997) (SR-Phlx-97-09).
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The Exchange believes an increase in the technology fee is
reasonable and necessary to support the ongoing efforts and deployment
of technology to facilitate trading and remain competitive. In
addition, the Exchange believes that assessing the $950 per month
technology fee on members and the $150 per month technology fee on
foreign currency options participants who do not hold legal title to a
Phlx membership is equitable in that the additional revenue generated
from the increased technology fee is intended to be mainly used to
facilitate trading on the equity and options floors, and not the
foreign currency options trading floor.
The purpose of amending the footnote that accompanies the
technology fee entry on the fee schedule is to clarify that foreign
currency options participants that hold legal title to a Phlx
membership are assessed the
[[Page 37193]]
technology fee in their capacity as a Phlx member and not additionally
in their capacity as a foreign currency options participant. The
Exchange believes this clarification should help to avoid member
confusion relating to the application of the technology fee.
2. Statutory Basis
The Exchange believes that its proposed rule change is consistent
with section 6(b) of the Act \7\ in general, and furthers the
objectives of section 6(b)(4) of the Act \8\ in particular, in that it
is an equitable allocation of reasonable dues, fees, and other charges
among Exchange members, as all members (except foreign currency options
participants who do not hold legal title to a Phlx membership) \9\ will
be subject to the increased fee.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
\9\ The Exchange does not believe that it is appropriate to
apply the proposed fee increase to foreign currency options
participants who do not also hold legal title to a Phlx membership
because such participants are unlikely to benefit from the
technology-related expenditures that the proposed fee increase is
intended to address. The Exchange believes that the number of
foreign currency option contracts currently traded on the Exchange
is an insignificant part of the Exchange's overall options trading
program.
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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 inappropriate burden on competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has been designated as a fee
change pursuant to section 19(b)(3)(A)(ii) of the Act \10\ and Rule
19b-4(f)(2) thereunder.\11\ Accordingly, the proposal will take effect
upon filing with the Commission. 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.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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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 NW., Washington, DC 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 Phlx. All
submissions should refer to File No. SR-Phlx-2003-41 and should be
submitted by July 14, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-15714 Filed 6-20-03; 8:45 am]
BILLING CODE 8010-01-P