[Federal Register Volume 65, Number 51 (Wednesday, March 15, 2000)]
[Notices]
[Pages 14005-14006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6315]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42497; File No. SR-Phlx-00-09]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Philadelphia Stock 
Exchange, Inc. Relating to Registration and Annual Fees for Off-Floor 
Traders

March 6, 2000.
    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 February 7, 2000, 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 Exchange. The 
Exchange has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the Phlx under Section 
19(b)(3)(A)(ii) of the Act,\3\ which renders the proposal effective 
upon filing with the Commission. 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 schedule of dues, fees and 
charges to require all current and future off-floor traders to pay an 
initial registration fee and an annual fee thereafter of $1,000.00 for 
all off-floor traders registered as of April 1 of each year.\4\
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    \4\ The Phlx states that their Examinations Department checks 
the member firms on a monthly basis to determine the number of 
traders to whom these fees apply. The Phlx, in turn, bills the 
member firm an amount based on the number of traders who are new 
registrants. See telephone conversation of March 6, 2000, between 
Richard S. Rudolph, Counsel, Phlx, and Joseph P. Morra, Attorney, 
SEC.
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    Specifically, the Exchange seeks to require associated persons of 
member organizations for which the Exchange is the Designated Examining 
Authority

[[Page 14006]]

(``DEA''), but who are not themselves Exchange members, who engage in 
proprietary trading of equities and options, including, but not limited 
to, persons who execute such trades or make trading decisions with 
respect to such trades, to pay an increased $1,000.00 registration fee 
and thereafter an increased annual fee of $1,000.00. The proposed 
increases would apply to those persons who are not Exchange members 
registered in a trading capacity on the floor of the Exchange. The 
proposed increases in the registration and annual fee are to be 
effective as of March 1, 2000.
    The text of the proposed change to the Phlx fee schedule 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 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 proposed rule change amends the Phlx's fee schedule to increase 
the annual fee to $1,000.00 for registered proprietary traders, i.e., 
persons who are currently associated with member organizations for 
which the Exchange is the DEA, but who are not themselves Exchange 
members, who engage in proprietary trading of equities and options from 
off-the-floor of the Exchange by filing a Form U-4 and a fingerpint 
card as well as provide proof of successful completion of the Uniform 
Registered Representative Examination, Series 7. At this time, the 
Exchange charges such traders an initial registration fee of $200.00 
and an annual fee of $200.00. The initial registration fee applies to 
persons currently trading from off-the-floor and to persons who 
register to trade from off-the-floor in the future. The payment of the 
increased initial registration fee of $1,000.00 will be prerequisite to 
engaging in trading from off-the-floor of the Exchange.
    All such persons who are registered with the Exchange as of April 
1st, of each year will be assessed an annual fee of $1,000.00. The fees 
are proposed to be increased from $200.00 in recognition of the 
increased costs of administration that the Exchange has been and will 
be incurring. The Exchange has experienced increased administration 
costs incurred in conducting background checks on the individuals to 
whom the fees apply; processing of forms; fingerprint charges; requests 
for disciplinary history of all current and future off-floor traders to 
the Central Registration Depository; as well as conducting on-site 
examinations of the home and branch offices of the various member firms 
with which off-floor traders associate. During the course of 1999, the 
Exchange experienced an increase in the number of member organizations 
utilizing off-floor traders who would be subject to the increased 
annual charge. Additionally, the Exchange undertook increased 
administrative and regulatory responsibilities associated with such 
member organizations and their off-floor traders, including scheduling 
more frequent compliance inspections.
2. Statutory Basis.
    The Exchange believes that the proposed rule change is consistent 
with Section 6 of the Act in general, and in particular, with Section 
6(b)(4), in that it provides for the equitable allocation of 
resasonable dues, fees and other charges among its members and other 
persons using its facilities.

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 proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \5\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\6\ because it involves a due, fee, or other charge. 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. \7\
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    \5\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \6\ 17 CFR 240.19b-4(f)(2).
    \7\ 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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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 Exchange. All 
submissions should refer to file number SR-Phlx 00-09, and should be 
submitted by April 5, 2000.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 00-6315 Filed 3-14-00; 8:45 am]
BILLING CODE 8010-01-M