[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63098-63099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30086]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42122; File No. SR-Phlx-99-34]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. To Amend Registration Fees for Registered 
Representatives

November 10, 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 August 26, 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. On October 25, 1999, the Phlx submitted to the Commission 
Amendment No. 1 to the proposed rule change.\3\ 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.
    \3\ See Letter from Jurij Trypupenko, Counsel, Phlx to Sharon 
Lawrence, Senior Special Counsel, Division of Market Registration 
(``Division''), Commission, dated October 21, 1999 (``Amendment No. 
1''). Amendment No. 1 clarifies the purpose for the increase in 
fees, the date on which the proposed fee increase will take effect, 
and the NASD's role in billing and collecting the fees for the 
Exchange. Because Amendment No. 1 is substantive, the Commission 
deems the date of the filing to be October 25, 1999, the date of the 
amendment was filed with the Commission.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The Exchange proposes to amend its fee schedule for Registered 
Representative registration. Specifically, the initial, maintenance, 
and transfer registration fees pertaining to Registered Representative 
registration will each be increased to $25.00, effective January 1, 
2000. The text of the proposed rule change is available at the Phlx 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 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. The Phlx 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 Exchange proposes to increase its fees for the initial 
registration, maintenance, and transfer of Registrated registrations 
with the Exchange from $12.00 to $25.00. These fees, which were adopted 
in 1993,\4\ and subsequently adjusted in 1995 \5\ and 1997,\6\ are 
payable by member organizations that apply for, maintain, and transfer 
Registered Representative registrations. The proposed fee increase 
would become effective January 1, 2000, and would apply to Registered 
Representative fees incurred on or after that date. Therefore, any 
initial registration filed in 1999 would be subject to the current 
$12.00 initial registration fee. Similarly, any maintenance or transfer 
fees incurred in 1999 would be subject to the current $12.00 
maintenance or transfer fee. The National Association of Securities 
Dealers, Inc. (``NASD'') will bill for the year 2000 fees in November 
1999 and, thereafter, will collect the fees for the Exchange.\7\
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    \4\ Securities Exchange Act Release No. 32833 (September 14, 
1993), 58 FR 48922 (September 20, 1993).
    \5\ Securities Exchange Act Release No. 36348 (October 6, 1995), 
60 FR 53450 (October 13, 1995).
    \6\ Securities Exchange Act Release No. 39044 (September 10, 
1997), 62 FR 48914 (September 17, 1997).
    \7\ The Exchange represents that initial, transfer, and 
maintenance Registered Representatives fees have traditionally been 
billed and collected by the NASD. The NASD would continue to bill 
for and collect these fees under the proposed rule change. Phone 
message from Jurij Trypupenko, Counsel, Phlx, to Melinda Diller, Law 
Clerk, Division, Commission, on October 28, 1999.
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    The purpose of the proposed rule change is to address increased 
costs associated with maintaining survelliance and regulatory programs 
in a sophisticated trading environment. The Exchange continues to 
believe that strong survelliance and regulatory

[[Page 63099]]

programs are essential for the Exchange to maintain a fair and orderly 
market for the investment community.
    According to the Exchange, general costs associated with the 
Exchange's surveillance and regulatory programs have continued to rise. 
Since the last Registered Representatives fee increase in 1997,\8\ 
costs associated with the Exchange's surveillance and regulatory 
programs have increased in excess of 100%, a ten-fold increase over the 
increase in costs during the prior two-year period.\9\ This increase in 
costs is attributable to, among other things, inflationary and 
competitive affects on the cost of staffing, equipment, and technology 
and expansion of the Exchange's surveillance and regulatory 
programs.\10\ Moreover, the Exchange has listed, and will likely to 
continue to list, new issues and products, which may trigger 
significant additional surveillance and regulatory costs.\11\
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    \8\ See note 6, supra.
    \9\ See Amendment No. 1, supra note 3.
    \10\ Id.
    \11\ Id.
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2. Statutory Basis
    For these reasons, the Exchange believes the proposed rule change 
is consistent with Section 6 of the Act, \12\ in general, and furthers 
the objectives of Sections 6(b)(4) of the Act \13\ in particular, in 
that it provides for the equitable allocation of reasonable dues, fees, 
and other charges among its members and other persons using its 
facilities. \14\
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    \12\ 15 U.S.C. 78f.
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
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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 burden on competition 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 neither solicited nor received written comments with 
respect to the proposed rule change.

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 charge imposed by the Exchange, it has become effective 
pursuant to Section 19(b)(3)(A)(ii) of the Act \15\ and subparagraph 
(f)(2) of Rule 19b-4 thereunder.\16\ The Exchange intends to implement 
the fee, effective January 1, 2000. At any time within 60 days of the 
filing of the amended 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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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 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, as amended, 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, 
DC 20549-0609. Copies of the submission, all subsequent amendments, all 
written statements with respect to the amended 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 also will be available for inspection and copying 
at the principal office of the Phlx. All submissions should refer to 
File No. SR-Phlx-99-34 and should be submitted by December 9, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-30086 Filed 11-17-99; 8:45 am]
BILLING CODE 8010-01-M