[Federal Register Volume 65, Number 60 (Tuesday, March 28, 2000)]
[Notices]
[Pages 16445-16447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7588]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-42562; File No. SR-Phlx-00-18]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the Philadelphia Stock Exchange, Inc. Relating to the Monthly 
Examination Fee

March 22, 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 18, 2000, 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. On March 13, 2000, 
the Exchange submitted Amendment No. 1 to the proposed rule change.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange corrected the Schedule of 
Dues and Fees contained in Appendix A to reflect the current status 
of recently proposed fees. See letter from Murray L. Ross, 
Secretary, Phlx, to Nancy Sanow, Senior Special Counsel, Division of 
Market Regulation (``Division''), SEC, dated March 10, 2000 
(``Amendment No. 1'').

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[[Page 16446]]

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 increase the monthly examinations fee from $1,000 per month 
to $2,000 per month. The proposed increase in the Examinations Fee is 
to be effective as of March 1, 2000. The text of the proposed change is 
available at the Phlx and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
the 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 Exchange is proposing to increase from $1,000 per month to 
$2,000 per month the Examinations Fee paid by member organizations for 
which the Exchange is the Designated Examining Authority (``DEA'') and 
which do not meet any of the exemptions to the examinations fee. Those 
exemptions remain unchanged.\4\ Since the implementation of this fee in 
1995, the number of member organizations for which the Exchange is the 
DEA, and which are subject to the Examinations Fee, has more than 
doubled.
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    \4\ The Examinations Fee was approved by the Commission on 
December 12, 1994 and made effective January 1, 1995. See Exchange 
Act Release No. 35091 (Dec. 12, 1994), 59 FR 65558 (Dec. 20, 1994).
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    The Exchange has experienced increased administrative costs 
incurred while conducting examinations of member organizations, not 
only due to increased travel and lodging costs for its examiners, but 
also because of an increase in the amount of staff time committed to 
undertake such examinations. The Exchange notes that a number of member 
organizations subject to the Examinations Fee operate as foreign-based 
registered broker-dealers.
    Additionally, the Exchange has had to increase the amount of staff 
time devoted to the service function it performs for firms. This 
service function consists of initially advising firms on how to set up 
financial reporting records, comply with Exchange and Commission rules, 
and comply with supervisory procedures and controls required by the 
Exchange and the Commission. Moreover, the Exchange has undertaken 
increased administrative and regulatory responsibilities associated 
with member organizations and their off floor traders, including 
scheduling more frequent compliance inspections as part of the 
Examinations Department's audit plan.\5\
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    \5\ The Exchange notes that the enumerated exemptions from the 
Examinations Fee remain unchanged. See note 2 to Appendix A. 
Moreover, the proposed change will not affect the current procedures 
pursuant to which the actual cost of an examination is passed 
through to members in the event a self-regulatory organization other 
than the Phlx conducts the examination. See Exchange Act Release No. 
39744 (March 11, 1998), 63 FR 13294 (March 18, 1998).
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    In order to compensate for the extensive staff time, examination 
and regulatory administrative cost associated with examining off-floor 
firms that are not active participants in Phlx markets, the Exchange 
proposes to amend its fee schedule by increasing the Examinations Fee 
to $2,000 per month.\6\ The firms subject to the Examinations Fee are 
all located off the Exchange's trading floors.
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    \6\ See Appendix A attached hereto.
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2. Statutory Basis
    The Exchange represents that the proposed rule change is consistent 
with Section 6(b) \7\ of the Act in general and furthers the objectives 
of Section 6(b)(4) \8\ in particular because it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
its members and other persons using its facilities.
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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 or unnecessary burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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 
charge imposed by the exchange and, therefore, has become effective 
upon filing pursuant to Section 19(b)(3)(A) of the Act \9\ and 
paragraph (f)(2) of Rule 19b-4 thereunder.\10\
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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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    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 purpose of the Act.

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 the 
principal office of the Phlx. All submissions should refer to File No. 
SR-Phlx-00-18 and should be submitted by April 18, 2000.
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    \11\ In reviewing this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 USC 
78c(f).

    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.

[[Page 16447]]



                               Appendix A
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New Text Underlined; Deleted Text
 Bracketed:
Membership dues or Foreign Currency User     $166.67 monthly.
 Fees 1.
Foreign Currency Option Participation Fee..  $166.67 monthly.
Application Fee............................  $200.00.
Initiation Fee.............................  $1,500.00.
Transfer Fee...............................  $500.00.
Trading Post/Booth.........................  $250.00 monthly.
Controller Space...........................  $750.00 quarterly.
Floor Facility Fees........................  $375.00 quarterly.
Shelf Space on Equity Option Trading Floor.  $375.00 quarterly.
Direct Wire to the Floor...................  $60.00 quarterly.
Telephone System Line Extensions...........  $22.50 monthly/per
                                              extension.
Wireless Telephone System..................  $200.00 monthly.
Execution Services/Communication Charge....  $200.00 monthly.
Stock Execution Machine Registration Fee     $300.00.
 (Equity Floor).
Equity, Option, or FCO Transmission Charge.  $750.00 monthly.
FCO Pricing Tape...........................  $600.00 monthly.
Option Report Service:
    (New York).............................  $600.00 monthly.
    (Chicago)..............................  $800.00 monthly.
Quotron Equipment..........................  $225.00 monthly.
Instinet, Reuters Equipment................  cost passed through.
Examinations Fee...........................  $[1]2,000.00 monthly 2 or
                                              pass-through of another
                                              SRO's fees.
Technology Fee 3...........................  $100.00 monthly.
Review/Process Subordinated Loans..........  $25.00.
Registered Representative Registration:
Initial....................................  $25.00
Maintenance................................  $25.00 annually.
Transfer...................................  $25.00.
Option Mailgram Service....................  $117.00 monthly.
Off-Floor Trader Initial Registration Fee..  $200.00.
Off-Floor Trader Annual Fee................  $200.00.
Computer Equipment Services, Repairs or      $100.00 per service call
 Replacements 4.                              and
                                             $75.00 per hour (Two hour
                                              minimum).
Computer Relocation Requests 5.............  $75.00 per person, per hour
                                              (Two hour minimum).
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1 An exemption from foreign currency user fees is extended to PHLX
  members also holding title to a foreign currency options
  participation.
2 This fee is applicable to member/participant organizations for which
  the PHLX is the DEA. The following organizations are exempt: (1)
  inactive organizations; (2) organizations operating from the PHLX
  trading floor which have demonstrated that at least 25% of their
  income as reflected on the most recently submitted FOCUS Report was
  derived from floor activities; (3) organizations for any month where
  they incur transaction or clearing fees charged directly by the
  Exchange or by its registered clearing subsidiary, provided that the
  fees exceed the examinatiions fee for that month; and (4)
  organizations affiliated with an organization exempt from this fee due
  to the second or third category. Affiliation includes an organization
  that is a wholly owned subsidiary of or controlled by or under the
  common control with an exempt member or participant organization. An
  inactive organization is one that had no securities transaction
  revenue, as determined by semi-annual FOCUS reports, as long as the
  organization continues to have no such revenue each month.
3 An exemption from the technology fee is extended to foreign currency
  options participants who are also affiliated with the Exchange as Phlx
  members.
4 These fees will be effective from January 1, 2000 until March 31,
  2000, unless extended consistent with the requirements of Section
  19(b) of the Securities Exchange Act of 1934. At this time, these fees
  will not be applied to participants on the Foreign Currency Options
  Trading Floor.
5 These fees will be effective from January 1, 2000 until March 31,
  2000, unless extended consistent with the requirements of Section
  19(b) of the Securities Exchange Act of 1934. At this time, these fees
  will not be applied to participants on the Foreign Currency Options
  Trading Floor.

[FR Doc. 00-7588 Filed 3-27-00; 8:45 am]
BILLING CODE 8010-01-M