[Federal Register Volume 64, Number 210 (Monday, November 1, 1999)]
[Notices]
[Pages 58877-58878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-28456]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42058; File No. SR-Phlx-99-43]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Assessment of a Capital Funding Fee

October 22, 1999.
    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 October 1, 1999, the Philadelphia Stock Exchange, Inc. (``Phlx'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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[[Page 58878]]

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

    The Phlx is proposing to amend its schedule of dues, fees, and 
charges to charge the owners of each of the 505 Exchange memberships a 
monthly capital funding fee of $1,500 per membership.\3\ This fee will 
remain in effect for 36 consecutive months and will provide funding for 
capital improvements.
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    \3\ Telephone conversation between Marla Chidsey, Law Clark, 
Division of Market Regulation, Commission, and Cynthia Hoekstra, 
Counsel, Phx (October 20, 1999).
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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 Exchange 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, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Phlx is prosing to amend its fee schedule to include a monthly 
fee of $1,500, per membership, charged to each owner of the Exchange's 
505 memberships.\4\ The monthly fee will be due on the last business 
day of the previous calendar month. Thus, the owner is responsible for 
paying the entire subsequent month's fee on the last business day of 
the prior month. The Exchange intends to segregate the funds generated 
from this $1,500 fee from Phlx's general funds. This fee will remain in 
effect for 36 consecutive months. At the end of the 36-month period, 
the Exchange will reevaluate its long-term financing plan to determine 
whether this fee should continue.
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    \4\ For the purposes of this proposal, an ``owner'' means any 
person or entity who holds equitable title to a membership in the 
Exchange.
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    This monthly fee will be treated like a contribution to capital and 
will provide funding for technological improvements and other capital 
needs.\5\ Specifically, it is intended to fund capital purchases, 
including hardware for capacity upgrades, development efforts for 
decimalization, trading floor expansion, and communication 
enhancements. The revenue from the fees will assist in allowing the 
Exchange to remain competitive in the current capital markets 
environment.
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    \5\ This fee is distinguished from the technology fee that the 
Exchange implemented in 1997. The technology fee was intended to 
cover system software modifications, upgrades to the operating 
systems on the Exchange's trading floors, Year 2000 modifications, 
specific system development costs, hardware upgrades to handle 
expected increased trading volumes, and anticipated increases due to 
SIAC and OPRA communication changes. See Securities Exchange Act 
Release No. 38394 (March 12, 1997) 62 FR 13204 (March 19, 1997) SR-
Phlx-97-09).
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2. Statutory Basis
    For these reasons, the Exchange believes that the proposed rule 
change is consistent with Section 6 of the Act,\6\ in general, and with 
Section 6(b)(4),\7\ in particular, because it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members. The Exchange believes that the capital funding fee is 
reasonable and equitable because it is imposed on every seat owner and 
will provide important funding for capital improvements. In reviewing 
this proposal, the Commission has considered its impact of efficiency, 
competition, and capital formation.\8\
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78c(f).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange represents that it does not believe that the proposed 
rule will impose any 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

    The Exchange has neither solicited or received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    The foregoing proposed rule change has become immediately effective 
upon filing pursuant to Rule 19(b)(3)(A)(ii) of the Act \9\ and Rule 
19b-4(f)(2) \10\ thereunder because it establishes a due, fee, or other 
charge. 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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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. 
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-99-43 and should 
be submitted by November 22, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority. \11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-28456 Filed 10-29-99; 8:45 am]
BILLING CODE 8010-01-M