[Federal Register Volume 64, Number 7 (Tuesday, January 12, 1999)]
[Notices]
[Pages 1851-1852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-637]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40885; File No. SR-SCCP-98-04]
January 5, 1999.


Self-Regulatory Organizations; Stock Clearing Corporation of 
Philadelphia; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Reducing Certain Trade Recording Fees

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 29, 1998, the 
Stock Clearing Corporation of Philadelphia (``SCCP'') 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 primarily by SCCP. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The purpose of the proposed rule change is to extend on a pilot 
basis for three months through December 31, 1998, a reduction in SCCP's 
fee schedule for trade recording fees for certain specialists.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule

    In its filing with the Commission, SCCP included statements 
concerning the purpose of and statutory basis for the proposed rule 
change. The text of these statements may be examined at the places 
specified in Item IV below. SCCP has prepared summaries set forth in 
sections (A), (B), and (C) below, of the most significant aspects of 
such statements.\2\
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    \2\ The Commission has modified parts of these statements.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    SCCP proposes to extend, for a three month period, its pilot 
program that reduces SCCP's trade recording fees for certain 
specialists. On February 9, 1998, the Commission temporarily approved 
the trade recording fee reduction effective for trades settling January 
2,

[[Page 1852]]

1998, through April 30, 1998.\3\ Subsequently, the Commission has 
approved extensions of the pilot program through September 30, 1998.\4\
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    \3\ Securities Exchange Act Release No. 39630 (February 9, 
1998), 63 FR 7848.
    \4\ Securities Exchange Act Release Nos. 39948 (May 4, 1998), 63 
FR 25538 and 40274 (July 22, 1998), 63 FR 40578.
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    Prior to the approval and implementation of the pilot program, SCCP 
charged a trade recording fee of $.47 per side for regular trades. The 
pilot program bifurcates the category of trade recording fees for 
regular trades into trades not matching with PACE orders and trades 
matching with PACE orders.\5\ The trade recording fees for trades not 
matching with PACE orders remains $.47 per side. The pilot program 
reduces SCCP's trade recording fees for trades matching with PACE 
orders to: (i) $.27 per side for first 2,500 trades per month and (ii) 
$.10 per side for trades in excess of 2,500 per month.
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    \5\ PACE, an acronym for the Philadelphia Stock Exchange 
Automated Communication and Execution System, is a real time order 
routing and execution system.
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    SCCP believes that the trade recording fee reduction is equitable 
and reasonable. SCCP state that the PACE System provides participants 
and their customers with automated order entry, execution, and 
processing. One of the benefits of small order entry systems, such as 
PACE, is that customers pay lower fees for the use of PACE as opposed 
to manual order entry. SCCP further states that another benefit of PACE 
is the increased efficiency associated with automated order processing. 
In fact, lower fees generally recognize the reduction of participant 
and exchange personnel involved in PACE transactions. Therefore, 
reducing the total cost of exchange trading, in an equitable fashion, 
should encourage additional PACE business, which in turn, extends the 
many benefits of PACE to additional customers.
    SCCP also believes that the proposed rule change provides tangible 
benefits for specialists that further promotes PACE business. Lower 
PACE fees for specialists should encourage specialists to more 
aggressively offer price improvement and should also provide increased 
liquidity for specialists as it reduces their cost of doing business. 
Additionally, lower PACE fees should make the fees for PHLX trades more 
competitive with other exchanges. This proposed rule change thus 
provides financial incentives for specialists to provide competitive 
markets at the PHLX.
    For these reasons, SCCP believes that the proposed rule change is 
consistent with Section 17A(b)(3)(D) of the Act,\6\ which requires that 
the rules of a registered clearing agency provide for equitable 
allocation of reasonable dues, fees, and other charges for services 
which it provides to its participants.
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    \6\ 15 U.S.C. 78q-1(b)(3)(D).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP 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

    Because the foregoing rule change establishes or changes a due, 
fee, or other imposed by SCCP, it has become effective pursuant to 
Section 19(b)(3)(A)(ii) of the Act \7\ and Rule 19b-4(e)(2) thereunder 
\8\ until December 31, 1998. This extension will give the Commission 
and SCCP additional time to evaluate whether the pilot program fees are 
equitable. At any time within sixty 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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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19b-4(e)(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 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, N.W., Washington, D.C. 20549. 
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 that 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 Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing will also be available 
for inspection and copying at SCCP. All submissions should refer to the 
File No. SR-SCCP-98-04 and should be submitted by February 2, 1999.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-637 Filed 1-11-99; 8:45 am]
BILLING CODE 8010-01-M