[Federal Register Volume 64, Number 249 (Wednesday, December 29, 1999)]
[Notices]
[Pages 73111-73112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33851]



[[Page 73111]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42263; File No. SR-Phlx-99-47]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of a Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc., Relating to the Exemption of Certain Foreign Currency 
Options Participants From the Foreign Currency Options Participation 
Fee

December 21, 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 November 16, 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 as 
described in Items I, II, and III below, which Items have been prepared 
by Exchange.
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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 Exchange proposes to exempt the foreign currency option 
(``FCO'') participants who had contracted to sell their FCO 
participations as of July 30, 1999 from payment of the FCO 
participation fee.

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. The 
text of these statements may be examined at the places species 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 
Summary Basis for the Proposed Rule Change

1. Purpose
    On June 23, 1999, the Exchange submitted a proposed rule change to 
the Commission, to adopt an annual FCO participation fee for all FCO 
participants.\3\ The proposed rule change became immediately effective 
when it was fully filed.\4\The Exchange stated that it would bill this 
fee semi-annually, effective July 1, 1999, and that it would be payable 
beginning with FCO participants who held legal title as of July 30, 
1999.
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    \3\ See Securities Exchange Act Release No. 41780 (August 23, 
1999), 64 FR 47887 (September 1, 1999) (SR-Phlx-99-20).
    \4\ The Commission deemed the proposed rule change to be filed 
on July 21, 1999, the date of the last amendment, due to the 
substantive nature of the amendments.
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    The Exchange notified all FCO participants about the fee on June 
25, 1999. In its notification, the Exchange stated that the FCO 
participation fee would not apply to FCO participants who were not 
legal title holders as of July 30, 1999.
    The Exchange, pursuant to its By-laws,\5\ must provide notice to 
the membership at least fourteen days prior to the effective transfer 
of legal title to an FCO participation. Within two weeks prior to July 
30, 1999, 46 FCO participants contracted to sell their FCO 
participants. The fourteen-day notice period of these 4 sales extended 
beyond July 30, 1999, and subjected those 46 FCO participants to the 
new FCO participation fee.
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    \5\ See Phlx By-law Article I, Section 1-1(i); Phlx By-Law 
Article XV, Section 15-1.
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    On October 20, 1999, the Exchange's Finance Committee discussed 
this situation, clarifying that the intent of the FCO participation fee 
was to capture only FCO participants who had contracted to sell their 
participation as of July 30, 1999.\6\ Accordingly, the Exchange will 
exempt FCO participants who had contracted to sell their participations 
by that date from payment of the participation fee.
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    \6\ The Exchange purchased 41 out of the 46 FCO participants. 
The Exchange represents that the purchaser of the remaining FCO 
participations will pay a pro rata portion of the participation fee, 
calculated from the date the purchaser assumes legal title to the 
FCO participations, as provided by Phlx By-law Article XIV, Section 
14-7. Telephone conservation between John Dayton, Counsel, Phlx, and 
Murrary Ross, Vice President and Secretary, Phlx, and Hong-anh Tran, 
Attorney, and Joshua Kans, Special Counsel, Division of Market 
Regulation (``Division''), Commission, on November 24, 1999.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act \7\ in general, and further the objectives of 
Section 6(b)(4) \8\ 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. The Exchange 
believes that the exemption distributes the burden of the fee equitably 
because those who would qualify for the exemption have sold their FCO 
participation and will not benefit from any improvements implemented 
with funds from the fee.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx 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 rule change establishes or changes a due, fee or 
charged imposed by the Exchange and, therefore, has become effective 
upon filing pursuant to Rule (19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(2) thereunder.\10\ At any time within 60 days of the filing of 
such proposed rule change, the Commission may summarily abrogate such 
rate 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 purpose of the Act.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \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.\11\ 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

[[Page 73112]]

the principal office of the Phlx. All submissions should refer to File 
No. SR-Phlx-99-47 and should be submitted by January 19, 2000.
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    \11\ 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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    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. 99-33851 Filed 12-28-99; 8:45 am]
BILLING CODE 8010-01-M